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By Sandy Chockla, Franchise Owner, Expense Reduction Analysts
It is very important to first understand your current situation: what you are spending your money on, who your vendors are, and what contractual obligations you have with them. To do this, you should have your accountants run an Accounts Payable report that covers at least 12 months in order to capture seasonality of your purchases. The data should include the vendor name, invoice date, invoice amount, and your expense category. Be sure to pull the data from all of your locations to create a view of your total spend. If you pay some of your expenses via a credit card account, be sure to pull the details for that spend by vendor as well.
This examination of spend can surprise you. For example, if your business has multiple locations, you may find that your organization is buying the same thing at different prices at each location. Or, you may find that if you consolidate all of your spend, you are eligible for a rebate or discount that wasn’t being used. If you have contracts, verify that are you purchasing from those vendors, and are you receiving the pricing specified in the contract? Are some employees buying from “off contract” vendors, and is this at a higher price?
Sandy Chockla is a franchise owner and Principal Consultant for Expense Reduction Analysts (ERA). ERA has a network of experts in more than 40 overhead expense categories which I leverage to benchmark prices, review supplier agreements, and optimize our client’s purchases or services. This is done without compromising supplier quality or service. If you would like to have a discussion, you can contact Sandy at email@example.com or call direct at 970-232-4860