Businesses – don’t pay more than you have to (From Times Series)
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David Davis is managing director of the Mill Hill-based business, Total Purchasing Solutions. He has worked with more than 200 organisations ranging from schools to charities, retail chains and legal practices to help cut their costs and boost business. |
Businesses – don’t pay more than you have to
2:57pm Monday 8th March 2010
Behind every business there is someone looking to make a profit and ultimately to generate a significant positive cash flow for personal gain taken as salary, bonus or dividend. Therefore, sales are generated, money collected with an intermediary step - costs incurred buying raw materials, paying salaries and general business expenses.
Above all, keep the sales rolling in; make sure the cash is collected and CASH IN IS GREATER THAN CASH OUT (a very simplified business model).
Personally, my knowledge is in the area of ‘General Business Expenses’ and having worked with over 500 organisations I have find people have more of their self esteem tied into having ‘done the right thing’ in the past to making sure that they ‘do the right thing’ in the future. So suppliers are found a ‘trust’ develops and the relationship rolls-on.
But, those in procurement, facilities and finance should be more proactive in challenging incumbent suppliers. I often hear comments such as ‘we are getting the best price’ or ‘we have such a strong relationship I would not like this spoilt’. This is business we are talking about and not challenging suppliers means they are making more profit at your expense.
What is holding you back from slashing costs. Remember, if you role within the organisation in not generating sales then the most direct way you can contribute to profit and positive cash flow is to reduce costs.
