Category: Other

Have you reviewed your costs lately?

By Richard Kleiner

07 Sep 2018

Part Two

You may recall a recent article by Stephen Coleman introducing the Auditel Cost & Procurement service. I have been involved with this project from the outset, having met with David Kendall of Auditel last summer following some positive comments from another London based accountancy firm that have worked with Auditel for several years.

Stephen’s article outlined the impressive potential savings that Auditel had identified, and over the past few months we have begun to implement the suggested changes with a combination of existing and new suppliers. I continue to be impressed by the benefits that the service is adding to the firm. The cost savings themselves are most welcome however, equally as beneficial is the expertise and resources that it has added to our procurement processes. Auditel have, in essence, become the initial ‘go to’ for all of our indirect and overhead expenditure requirements. They have conducted due diligence on all suppliers, managed tender processes and negotiations, and have overseen the implementation of the final outcomes. To a degree, the role of my fellow partners and I has become that of providing direction and decision making.

Our agreement with Auditel is that their fees are contingent on the savings that are sustainably delivered into our business, and only once they have proven that these have been banked. From Auditel’s perspective, I would imagine that this approach comes with its perils, as clearly there is a vast amount of work and risk that they must invest to get to a stage of earning any just reward for their work. From our firm’s perspective, this approach means that the service doesn’t come with any cost to the firm and is completely self-funding. 

The current position of our project is as follows:

Mobile Telecoms – Our contract end date is December 2018 and we are in the process of setting up a move to a new supplier for 46% savings using the same underlying carrier.

Fixed Line Telecoms – We retained our existing supplier and are saving 11% on line rentals and an average of 47% saving on calls.

Data Telecoms – We retained our existing supplier having negotiated savings of 35% with immediate effect, despite the fact we are mid-term in our current contract.

Fuel Cards – We moved to a new supplier and are enjoying a staggering 20% cost saving as a result.

Archiving – We retained our existing supplier and are enjoying 10% savings on a revised contract.

Cleaning – We were initially going to retain our existing supplier for 15% savings, but this project has been delayed temporarily.

IT Services – We have a sizeable spend of several hundred thousand pounds per annum in this area. Auditel are currently reviewing the cost profile and are benchmarking this against alternative suppliers that they have qualified. Early predictions are that a significant saving could be made at tender.

Office Refurbishment – This is a large one-off cost to the firm, and Auditel were pivotal in providing procurement expertise to ensure we got the very best costs and products available to us in the marketplace. Auditel’s tender results were used as a negotiation tool with our chosen supplier.

We are only six months into the project and already we are seeing the physical savings in our accounts, and indeed budgeted decreases in cost for 2019 and beyond.

Over the last month, I have introduced several clients to Auditel in the hope that they will see similar results and benefits, including companies with significant spend on logistics, merchant cards and packaging. The self-funding fee structure that we have used means that there is nothing to lose and everything to gain from this process. It is a no-brainer in my opinion and something that I would urge all clients with a sizeable indirect cost base to explore further.

Should you wish to be introduced to David Kendall, then please contact Stephen Coleman or myself.

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