Turn Expense Audits into a Company-Wide Game and Boost Your Bottom Line
Greetings, fellow business leaders! Christina Haxton here, your no-nonsense guide from the Center for Sustainable Strategies.
Let’s talk about something every leader loves to hate: EXPENSES.
Yep, those pesky little costs that eat away at your hard-earned revenue (and more importantly, your profitability and EBIT). But fear not! Today, we’re diving into how a good old-fashioned expense audit can save your bacon and fatten up that bottom line. And, I’ve got a compelling case study to share that proves even the most reluctant number-crunchers can get on board and make a significant impact.
Why You Need to do an Expense Audit Where Everyone Can Play (Yesterday)
Find Hidden Treasures: Regular audits, where all employees can join in the game, uncover those sneaky little costs and inefficiencies that are bleeding the company dry.
Master Your Finances: Categorizing and analyzing expenses gives you a crystal-clear view of your financial health. When everyone has an understanding of the financial basics of running a business, you increase the odds they will take ownership.
Cash Flow Mojo: Cutting out the fluff means more cash on hand for growth or just keeping the lights on.
Profit Party: Lowering your operational costs is like putting money straight into your (or the department's) pocket. By everyone having a number, like finding 1% savings in their role, makes it easy, specific and a game everyone can play.
Stay Out of Trouble: Expense audits make sure you’re not stepping on any regulatory landmines.
Case Study: Turning Expense Audits into a Company-Wide Game
Company Snapshot:
Industry: Manufacturing
Revenue: $23M
Team: CEO and an executive team of 6
The Challenge:
Our friends in a small Colorado manufacturing business were drowning in cash flow issues despite a respectable $23M in revenue. Rising operational costs were a thorn in their side. They needed to trim the fat and fast. So, they came to us for help.
The Game-Changer:
We decided to spice things up and turn this expense audit into a game. Yep, a full-on company-wide challenge. Here’s how we rolled it out:
Team Involvement: Each executive team member, their direct reports, and entire departments were challenged to sniff out cost-saving opportunities - just a 1% savings. Easy! It was all hands on deck.
Points & Prizes: We awarded points for creative solutions and actual savings. Top performers scored some sweet rewards.
Ownership: Everyone, from the janitor to the CFO, took ownership and contributed their ideas. No role was too small!
The Audit Process:
Categorized Expenses: We broke down expenses into neat categories: administrative, operational, marketing, tech, financial, and miscellaneous.
Historical Analysis: Dug into past reports to spot trends and weird anomalies.
Necessity Check: Scrutinized each expense to see if it was really needed.
Redundancy Hunt: Identified and killed off duplicate services and subscriptions.
Negotiation Time: Renegotiated terms with suppliers and service providers.
Implemented Savings: Adopted energy-saving practices, optimized the supply chain, and slashed waste.
Set Budgets: Established spending caps to keep future expenses in check.
Continuous Monitoring: Kept an eagle eye on expenses and reviewed budget performance regularly.
The Results:
Quick Wins: Within three months, we started seeing positive changes.
Big Savings: Annual savings hit about $750,000. Not too shabby, right? We ditched redundant services, got better deals, and boosted efficiency.
Cash Flow Magic: Freed-up cash improved liquidity, allowing investments in new equipment and workforce training. Productivity went through the roof.
The Big Impact:
The expense audit wasn’t just about saving money. It fostered a culture of cost-consciousness and efficiency. The game-like challenge got everyone’s creative juices flowing, leading to innovative solutions and a more engaged team. The CEO and executive team now had a crystal-clear view of spending patterns, helping them make smarter financial decisions. This proactive approach set the stage for sustainable growth and improved profitability.
Wrapping It Up
Listen up, folks. Quarterly expense audits are a must for any business looking to streamline operations, cut costs, and boost cash flow. Our case study proves that a systematic and fun approach to expense management can yield big-time benefits. By turning the audit into a company-wide challenge, you can unlock hidden savings, enhance financial performance, and build a motivated, efficient team.
Got similar challenges? Let’s tackle them head-on. Conduct an expense audit and make it an engaging, all-hands-on-deck mission. For more info on effective expense audits or to learn about our services, hit us up at the Center for Sustainable Strategies. Let’s build a more sustainable and profitable future for your business. No BS, just results.
P.S. Looking for a tool to let you see exactly what your expenses are, where you can find cost savings, and immediately improve your bottom line, all in one place? Keep an eye on your emails where we’ll be dropping something we’ve been working on to help! Not on our email list? Sign up here!
Stay savvy and keep winning!
