As focus on reducing expenses

Whether in times of crisis or prosperity, every company should have a clear policy for the management and control of expenditure. Today the word crisis has become fashionable, it also appears the term "Cost Reduction?, Which is no longer a requirement but an obligation for responsible companies. As a cost reduction focus? First, do not make the mistake of setting a percentage. "Reduction of 15 percent by department or area?. "Reduction of $ 150,000 for the entire company.? The monitoring of expenditure is an activity that must be performed regularly, preferably every month and compared not only with the budget but with its tendencies and prior periods. This is one of the main responsibilities of Chief Financial Officer or Controller as the company has these executives in their squad. The following technique will allow charges to pass filters to determine whether they can be subject to reduction: Required: You must question every expense line and justify that this is necessary. Ask each leader and manager to justify the need for each item of expenditure. Strategy: Determine whether the expense is part of the strategy of the company or if the expense if it is a strategic tool to reach new customers, positioning the company or stay in business.

Pay attention to that can not be many strategic spending. Replaceable You can override this spending by another minor? can be replaced or consolidated with another area or another area? There may be alternatives or other options at this expense. Snooze: Can your company to postpone this expenditure? So when and what effect will it have? Impact the quality of the product or service? also define how they affect us in the short term.

Summarized in NERP as needed initial, strategic, and postpones replaceable. If spending goes to evaluate these filters, leave in place, otherwise you have to proceed as soon as possible to reduce or eliminate it. If you plan on spending reduction will affect the business, then no need to reduce or eliminate it. A reduction in damaging the foundations of the business or the relationship with customers or suppliers should be evaluated several times and documented well before making the decision. If a cost reduction affects the medium term strategy and the operation of the company, then you should not be subject to reduction, but if monitoring and achieving "tie? favorable results in sales, quality, service. The reductions are painful, but should be performed. The most difficult issue is when we have to evaluate and reduce the payroll. Assess first if it can redeploy staff if you can reduce hours if you can put them in other companies, or may advance vacation. The human resource is where you have invested and can not forget the costs you will have to rehire when. Because crises come and go, survived the best companies, primarily those who take action at the right time.