Some retail clients have been wary of 3D-Secure (MasterCard SecureCode and Verified by Visa) believing that business has been lost as card users continue to be nervous of the system. In the last 2 years we have witnessed a marked increased take up, driven both by the opportunity to reduce costs, as most acquirers charge a premium for non-secure transactions, and the desire to reduce the costs and reputational damage resulting from fraud.

So what cost reduction opportunities are there for your organisation? Take a few minutes to look in to the following simple questions and you may just be able to boost your profit margin by cutting your transaction costs:
1. When payments are accepted over the phone or by mail order, do you require the provision and keying of the 3-digit security code (it’s surprising how often we find that staff choose not to key the code).
2. Has the decision on whether to operate 3D-Secure systems on your website been reviewed in the last 12 months?
3. What is the level on ‘non-secure transactions’ on your merchant card statements, and how has this changed in the past 6 months? As with all processes, good practice can slip if not monitored, so a quick check can make sure that you keep this cost on line.

Quite apart from the business expense of sorting out fraud claims and chargebacks, using the systems provided by the acquirers will reduce non-secure transaction fees which we have seen ranging from 10p per transaction to 0.85% of the transaction value. At a time when profit margins are under pressure, these cost saving ideas can be easy to manage and give benefit straight to your profit and loss.

Melanie Stern Editor of the Financial Director Magazine interviewed Robert Allison Managing Director of Expense Reduction Analysts regarding cost control strategies organisations can adopt in 2010.

Download your FREE copy click here

This issue aims to provide a range of practical advice from experts in the financial services field.

It includes tips and hints on the following areas:

• Insurance
• Professional advisors
• Employee benefits

Download guide here

In a recent survey 83% of charities questioned expected government funding to only stay the same or decrease in the next twelve months.  In fact two fifths of them thought it would decrease significantly.  Nearly 90% of them expected the same of their investment income.   The Baker Tilly report “Managing Charity Finances Through Uncertain Times” highlighted the funding issues that charities face and questioned them over the actions they’re taking to cope with the, I would say “uncertain” outlook, but it seems all too certain to the charities.  Nearly 25% of respondents were in danger of running at a loss and draining reserves as they struggled to fully cover the costs of providing services.

So what are they doing to mitigate the pressure on income?  60% are looking for new sources of finance and 30% are looking to spend more on fund raising activities.  But with nearly all of those surveyed saying that they’re not seeing any improvement in the economic climate at the moment, and half of them not foreseeing improvement until at least the end of this year it’s going to be a tough battle.

Obviously the charities are looking to make savings.  Worryingly, this list included nearly a third of charities reducing their work, 10% closing down some of their projects and 10% reducing staff salaries.  Other action cited was the sale of assets, increasing the overdraft and deferring payments to suppliers!

Before such dramatic steps are taken it was gratifying to see some were looking to “reduce other costs” (albeit less than half of respondents) but it is worrying that more charities were cutting projects than considering their procurement!  In fact, it can be worth (and indeed is essential) charities look at their overheads first to see what can be saved before cutting back on their good works.

It may be some relief to them that by concentrating on reducing overheads, worthwhile savings can, undoubtedly, be found.  All charities and not for profit organisations should consider mundane things like; office costs (stationery, postage, photocopiers and the like), insurance, banking fees, telecoms, utilities etc.  Hospices, hospitals etc should look at janitorial supplies, laundry and even medical products.  Housing associations and homeless charities can consider things like buildings maintenance.  A finance director might be able to find that with a 20% reduction in his non-core costs an essential project or a number of key workers positions can be retained or even added.

The report’s authors commented in the summary that “Some (charities) have not made use of the good advice already available” and that “Charities should…bring in professional advisers where appropriate”.  At Expense Reduction Analysts we can help look at your overheads and through cost management and procurement bring about savings that can directly benefit your projects.  A number of charities have already saved money after a “no savings no fee” review of expenditure which has allowed them to apply more resource.  If, as a charity manager you need time to concentrate on finding new sources of funding then please contact us.  Closing projects, selling assets, delaying payments to suppliers and running up the overdraft isn’t going to help anybody!

The core focus of Maria Mallaband Care Group (MMCG) is on providing high quality care for all of their residents. During a period of rapid growth, it was imperative that Expense Reduction Analysts’ review of their costs did not in any way compromise this. In fact, as the project unfolded, MMCG’s management team benefited from Expense Reduction Analysts’ intervention: knowing that their key areas of expense were under expert control allowed them to focus more closely on the strategic changes they had to make in order to accommodate the expansion of their work.

Expense Reduction Analysts consultants Neil Cullen and Julia Goodfellow-Smith led a team of experts from the Expense Reduction Analysts’ network. Julia herself is an expert in office supplies, and the review has encompassed expense categories as commonplace as stationery and utilities, as well as those as specialised as medical supplies. In all areas, the consultants’ expertise has been apparent to MMCG.

“Debjani Duncan, Expense Reduction Analysts’ medical supplies expert, clearly knows the products and market place extremely well. Her review has meant that we now use a product range better suited to both our business and our residents, our staff are better trained, and we have made significant cost savings into the bargain.” – Vicky Craddock, Operations Director, MMCG.

With over 30 homes, Maria Mallaband Care Group is one of the UK’s leading care home providers, renowned for offering luxurious, modern facilities and outstanding services. Maria Mallaband ensures its residents receive a superior level of care, while maintaining a sense of dignity and enjoying a high standard of living.

 A number of things can be done which, if started soon enough, can help prevent the need for a compulsory redundancy situation arising.

 Help prevent compulsory redundancy by

• Stop recruitment
• Ban overtime
• Lay off agency workers
• Freeze pay increases
• Short time working *
• Appeal for volunteers
• Agree salary cuts *
• Reduce costs

 * May be contrary to, or in direct breach of, an employee’s contract of employment – seek advice where necessary

 In the event that disputes arise, tribunals will look favourably upon companies that have taken the above actions prior to making redundancies, having taken all reasonable steps to prevent it.

 Reducing costs can have a significant effect on a Company’s profitability and ability to ride out a temporary downturn in business. A modest £20k per annum saving can pay someone’s salary and significantly improve cash flow. For more on the effects of profit and turnover – see my previous blog by clicking the link below.

http://www.expense-reduction.co.uk/2010/01/can-profit-replace-turnover/

In Expense Reduction Analysts we believe that it is key that retailers who adopt this method enjoy a more competitive set of costs than previously, or any margin on the low value goods sold can be all too easily lost. Pivotal in this is a full appreciation of the differing costs the acquirers themselves face; as contactless payments are priced differently for them by both Visa and Mastercard.

We are in a long-term strategic game here, where the card issuers and acquirers want to see a critical mass behind this payment variation and see it replace cash. And do not forget, a card is only one medium…..the technology can be embedded into anything, e.g. phones, mp3s &c.

MasterCard’s research has found that 53 per cent of consumers are enthusiastic about contactless payment because of the convenience and speed.

Some 38 per cent of people think they will be using cash less in five years’ time.

Those retailers who see spends per customer at or below £15 will latch onto the research finding that showed 16 per cent of people said they often did not make everyday purchases such as newspapers, sweets or cigarettes because they did not have change or did not want to break a note.

First of all, find out what regulations are applicable to your organisation – you don’t want to be hit with a fine for non-compliance. Did you know that all waste has to be accompanied by a waste transfer note (WTN), that it’s your responsibility to produce the WTN (although most carriers will produce one for you) and that you must keep copies for two years? Did you know that all waste producers are required to “pre-treat” some of your waste before it goes to landfill? Do you know what “pre-treatment” entails?

Once you know how regulations affect your organisation, work out what waste you have. A good start is to walk around your premises and look to see what is in the bins. It really is worth a look, because the contents are not always as expected.

Armed with this information, consider whether you can change your processes to reduce the amount of waste produced. This is likely to reduce the volume of materials purchased as well as waste disposal costs, resulting in a cost reduction double-whammy. If you reduce the amount of packaging you use, it could also reduce your requirement to purchase PRNs – a cost reduction hat trick!

Then consider what elements of your waste can be recycled. Recycling your waste doesn’t necessarily cost more than just sending it to landfill, and will become ever more economically viable as the Landfill Tax continues to increase. Much waste that is recycled also has a value, so recycling can even result in income for your company – even better than cost reduction. Your duty of care obligations can also met by pre-treating your waste in this way.

So, there are plenty of opportunities to reduce cost in waste disposal. If you are unsure of how to tackle this on your own, or would like some expert help, please do get in touch.

This issue focuses on Banking and Finance and has been created in order to help ensure your business is managing it’s finances effectively and efficiently.

It includes advice on:

• Plastic card transactions
• Day to day bank service charges
• Finance processes

Download guide here