Make a difference to your bottom line

Paul Wheatley, a consultant with Expense Reduction Analysts, a leader in UK cost, purchase and supplier management, explains how organisations in the care sector can learn from the Comprehensive Spending Review in a recent issue of Caring UK

As the social care sector assesses the fallout from the Government’s recent Comprehensive Spending Review, the need for tighter cost management couldn’t be higher on the agenda for care homes across the private, public and not-for-profit sectors.

Regardless of the extent to which they are reliant on state funding, organisations throughout the care industry can identify – and eliminate – significant cost savings by following the Government’s lead and conducting their own Comprehensive Spending Review.

However, based on our experience of helping organisations reduce their costs, there is a need to focus on all expenditure areas, big and small, in order to achieve this. Care homes of all sizes must drill down deep into their organisations to identify and, where possible, reduce their cost base. Nothing should be left unaccounted for.

The following 10 tips offer simple ways of making a real difference to the health of your bottom line without compromising service levels:

• Create a ‘cost-aware’ culture, where senior staff lead by example and all colleagues are encouraged to balance value for money against the operational requirements of the items they purchase.
• Manage your major contracts carefully, highlighting end dates and notice period. Always tender your contract before the roll-over to ensure you are getting the best deal from your suppliers.
• Challenge all mid-contract price rises and ask the supplier to justify them before they are accepted.
• Only use first-class post when absolutely necessary. For example, second-class mail posted on a Friday afternoon will arrive at the same time as first-class mail posted on a Monday.
• While a franking machine undoubtedly offers a flexible way of sending mail, beware of hidden costs such as topping-up charges, tariff rate chips and ink cartridges which may detract from their value.
• The rateable value of your property is based on a five-year revaluation by the Valuation Office Agency. If you feel your business rates may be too high, you can appeal against it.
• Avoid calling directory enquiry numbers as this information is usually available online for free. If the call is necessary, never accept the offer to be connected by the operator as you could pay 50 times more per minute for the call than if you dialled the number yourself.
• Instigate a proactive energy management system. Avoid simply reviewing incumbent suppliers and instead investigate the market and benchmark against your peers.
• Separate out recycled and non-recycled waste. Sending waste to landfill is expensive and should be minimised.
• Finally, remember to continue looking for new cost saving ideas – even when you need them the least.