Apparently FTSE100 firms on average change their Auditors once every 48 years (and some multi-nationals have not changed for over a century according to the FT).   The current status quo does not address the threat of familiarity that results from re-appointing the same audit firm for decades and the independent view that is required could easily be compromised by this close relationship.  This has not only stifled competition but has compromised the ‘ethos of scepticism’ of the accounting profession vis-à-vis their clients.

From an Auditel perspective this lethargy is often found in its clients where invoices are paid because they were regularly paid in previous years or months, the original owner of the service has left, no-one is responsible for checking every invoice and the service/supplies being provided, or contracts have been allowed to roll over because there is no inventory of agreements or monitoring of the renewal terms.

Auditel do not provide a Financial Audit service, but do provide an independent view of an organisation’s overhead costs through its Free Business Healthcheck.   It starts with an assessment and analysis of the full spectrum of current business costs followed by a comprehensive report that identifies savings opportunities.   The next step is to implement the agreed changes and manage the entire process to help lower the cost of doing business.

From the work that it has done with over 3000 clients Auditel has a vast database of benchmark information, and with its completely supplier independent service is able to negotiate in the client’s best interests.   And finally the specialist tools it has available enable it to monitor clients’ agreements and alert them when a termination or roll-over date is near.

And, unlike the Big Four, who are unlikely to review these issues in any detail, our service uses a Performance Based Procurement model which means that we work solely in our clients’ best interests to deliver impressive and ongoing savings – without it costing them a penny.

Through our network of professional cost and procurement consultants there is a wealth of experience to help organisations reduce their overhead costs.   For further information about our Free Business Healthcheck contact Stephen Gaubert - call 020 8482 1370 or 07785 340 280, email stephen.gaubert@auditel.co.uk or visit www.auditel.co.uk/stephengaubert

The first event was ‘Making 2012 work for you’, where a variety of speakers, including London Mayor Boris Johnson and Transport Minister Theresa Villiers, outlined the opportunities which the Olympics will bring to SMEs.

On the one hand businesses will need to plan to make staff travel arrangements more flexible (including opportunities for working from home), to ensure that suppliers can deliver and orders to customers can be fulfilled, and that business resilience plans are up to date and tested.

On the other hand there are huge opportunities for business to benefit from the influx of up to 4 million visitors, and it is estimated that their spending will boost the UK economy by £1 billion.

The same evening I attended the President’s Reception at the London Chamber of Commerce and Industry where Lord Coe emphasised the benefits that the Olympics would bring to the UK, both sporting achievements and business opportunities.   Apart from the networking opportunities I was able to hold the 1948 Olympic torch!

Stephen Gaubert holding the 1948 Olympic Torch

 

The opportunities that the Olympics offers to all businesses cannot be under-estimated, and one way to ensure that the maximum benefit can be gained is to  carry out a review of essential overhead costs by taking advantage of Auditel’s ‘Free Business Healthcheck’.   Contact Stephen Gaubert now to find out how Auditel can help you lower the cost of doing business - call 020 8482 1370 or 07785 340 280, email stephen.gaubert@auditel.co.uk or visit www.auditel.co.uk/stephengaubert 

The scheme is due to start in 2012, with all firms joining by September 2016.

Full details are available on the DWP website – http://www.dwp.gov.uk/policy/pensions-reform/workplace-pension-reforms/.

The Government estimates that between four million and eight million workers will start to save in a pension scheme for the first time; this will be either by joining NEST, or being automatically enrolled into an employer’s existing pension scheme.   Employees will have to earn at least £7,475/year, and will have to contribute to the scheme, rising to 4% of their earnings by 2017.  

It is estimated that 750,000 employers will be impacted, and employers will have to contribute to the scheme, rising to 3% of employee’s earnings by 2017.

There is a concern from some business groups that the scheme will be complicated and place a significant administrative burden on small businesses, and make them uncompetitive; on the other hand, combined with the Government’s other reforms of pensions, this new scheme will, over time, help to improve the income of many pensioners who up to now have relied solely on the state pension.

The scheme will undoubtedly impose an extra cost on businesses, and it is therefore essential that all SMEs start now to ensure that they can bear these additional costs; one way is ensure that they conduct their own ‘Comprehensive Spending Review’, and by using Auditel’s network of professional cost and procurement consultants they will gain access to a wealth of experience helping organisations of any size reduce their overhead costs.  

For further information sign up for our Free Business Healthcheck before 30th November and you will be entered in a draw to win a new Apple iPad.   Contact Stephen Gaubert now to find out how Auditel can help you lower the cost of doing business - call 020 8482 1370 or 07785 340 280, email stephen.gaubert@auditel.co.uk or visit www.auditel.co.uk/stephengaubert

The future of the energy sector is a key issue for businesses as it one of the key areas where infrastructure investment is planned, with the prospect of over 70,000 jobs being created.   The Government says that the spending review will enable the UK to meet its environmental targets, including a 34 per cent reduction in greenhouse gas emissions by 2020.

First of all the bad news – the CRC Energy Efficiency Scheme was dramatically changed in the CSR.   The CRC Scheme, which eligible participants had to sign up for by the end of September, has already had a shaky start, and it is estimated that less than 50% of the organisations that were impacted had failed to register by the closing date, with the risk that they would be subject to fines.   The scheme affects around 5000 businesses and Government Departments.   The original intention was that the proceeds from selling emissions permits to the participants would be recycled within the scheme, with the penalties paid by participants that failed to cut their emissions being paid out to the organisations that had.   However, in the CSR the Government announced that the funds raised by the allowances will not now be given back to those who cut their bills the most and that the Government will now simply pocket the money raised instead.   It is estimated that the CRC will raise £1bn a year by 2014/5.   For a more detailed assessment of the impact of the CRC read my colleague Simon Hooper’s blog – http://auditelconsultants.co.uk/simonhooper/blog/.

On the more positive side is the Government’s clear intention to make the UK “a leader of the new green economy”.   Among the recent environmental announcements are:

• £1bn for a new Investment Bank to support low-carbon infrastructure projects
• Up to £1bn for a plant to create one of the first carbon capture and storage technology demonstration plants
• £200m for renewable energy that will mainly be devoted to offshore wind, including £60m destined to regenerate the ports infrastructure to make them fit for receiving the next generation of offshore wind farms
• £860m to promote the use of low-carbon energy for heating buildings, which will come from general taxation rather than as a levy on consumer’s energy bills

The energy markets are complex areas, and the changes planned over the next decade will have a major impact on energy users.   The majority of businesses do not have the resources or expertise to properly undertake energy procurement and management.   Through Auditel’s network of professional cost and procurement consultants there is a wealth of experience to help organisations of any size reduce their overhead costs and provide added value services such as energy efficiency advice.   As we are independent of the market we can obtain excellent prices for our clients, and because there is no hidden commission or brokerage included then our advice is transparent and not influenced by the rate of commission.  

For further information sign up for our Free Business Healthcheck before 30th November and you will be entered in a draw to win a new Apple iPad.   Contact Stephen Gaubert now to find out how Auditel can help you lower the cost of doing business - call 020 8482 1370 or 07785 340 280, email stephen.gaubert@auditel.co.uk or visit www.auditel.co.uk/stephengaubert

For many organisations the tendency is to look for those services where there are cost savings to be made, and where the service is non-strategic, with a number of competitive suppliers in the market – IT is a classic example where the day-to-day services of support and data processing can be outsourced to save money and improve performance.   Other areas are Finance and HR, where a number of functions are increasingly becoming candidates for outsourcing; it is estimated that in many organisations between 10-30% of the costs in these areas are being handled by third parties.

All too often the opportunity is not taken to introduce external expertise to work in partnership with the internal resources, by providing additional skills to complement them and to free them up to concentrate on those areas where specific product knowledge is required.

Procurement is one area where there has been little realisation of the benefits of outsourcing – however this is beginning to change.   A drive towards greater business agility will demand that procurement teams focus on activities that are more strategic to the business and off-load much of the day-to-day activity.   For those areas strategic to a business the retention of in-house expertise is sensible, but outsourcing the non-strategic procurement and obtaining external expertise and market intelligence offers significant benefits for organisations.   These benefits include:

• Using experts in those fields where a strong market awareness, technical understanding and negotiation skills are essential, such as energy and telecommunications
• Introducing a performance related fee structure to encourage the outsourcer to deliver real benefits to the business
• On-going management of suppliers and costs once the procurement exercise is finished
• Most importantly, installing a centre of excellence in an organisation where all aspects of procurement and costs are under a single point of control, from preparing and running the tender through to implementation and on-going contract management, thereby ensuring that the promised results are being achieved and that the supplier is delivering to the agreed service levels and invoicing correctly.

This is where Auditel can help organisations of any size to better manage their procurement.   As we are independent of the market we can obtain excellent prices for our clients, and because there is no hidden commission or brokerage included then our advice is transparent and not influenced by the rate of commission.  

Through our network of professional cost and procurement consultants there is a wealth of experience to help organisations reduce their overhead costs and provide added value services such as energy efficiency advice.   For further information sign up for our Free Business Healthcheck before 30th November and you will be entered in a draw to win a new Apple iPad.   Contact Stephen Gaubert now to find out how Auditel can help you lower the cost of doing business - call 020 8482 1370 or 07785 340 280, email stephen.gaubert@auditel.co.uk or visit www.auditel.co.uk/stephengaubert

This week will be a major milestone for UK energy projects – Chris Huhne has today approved the building of 8 new Nuclear power stations; other major announcements on the future of major Energy projects in the UK will feature in the Government’s Comprehensive Spending Review.

There were a number of key messages from the MEUC event:

• Major concerns to the business consumer at present – the lack of a stable market framework, understanding the affordability and true cost of the Green Agenda, availability of future electricity and gas supplies, and the increasing complexity of regulation and the red tape associated with the CRC Energy Efficiency Scheme
• Pricing is not the over-arching concern for business consumers, but reducing consumption by better energy management is the main emphasis for businesses
• Energy suppliers are developing a range of service offerings to their customers to assist in the energy management area
• Electricity and Gas supply availability this winter is sufficient to meet the anticipated demand; the reduction in demand following the recession has been dramatic – 10% reduction in electricity demand and 20% in gas demand
• Smart Meters/AMR are key to the management of energy usage by businesses; the tools and technology are available, and the key is to access the data to optimise an organisation’s energy portfolio
• Renewables will have to shoulder a significant burden of our energy supplies, increasing to over 30% by 2020
• The available supplies of gas in the world are sufficient for 250 years at current production rates; the impact of shale gas is growing, particularly in the US, enabling them to become an exporter of gas
• In the last 12 months the price of commodities has risen: Oil – up 22%, Coal up 2.5%, Electricity up 17% and Gas up 36%
• Predicting price movements is impossible, although the underlying trend will be upwards as we have to pay for the redevelopment of the infrastructure to handle renewables, and for the additional generating capacity that will be developed over the next decade
• The adoption of ‘green’ policies by businesses will become an increasingly powerful marketing tool

The energy markets are complex areas, and the majority of businesses do not have the resources or expertise to properly undertake energy management.   This is where Auditel can help organisations of any size to better manage their energy costs.   As we are independent of the market we can obtain excellent prices for our clients, and because there is no hidden commission or brokerage included then our advice is transparent and not influenced by the rate of commission.  

Through our network of professional cost and procurement consultants there is a wealth of experience to help organisations reduce their utilities costs and provide energy efficiency advice.   For further information sign up for our Free Business Healthcheck before 30th November and you will be entered in a draw to win a new Apple iPad.   For further information contact Stephen Gaubert now to find out how Auditel can help you lower the cost of doing business - call 020 8482 1370 or 07785 340 280, email stephen.gaubert@auditel.co.uk or visit www.auditel.co.uk/stephengaubert

The Report identifies a number of steps which should be taken to establish the principles behind cost management and procurement:

• Centralise procurement for commonly used products to leverage buying power and achieve best practice
• Produce accurate spend and consumption data
• Manage down demand and specifications
• Focus on the cost of products and services being bought as if it was the individual’s own money
• Audit 3^rd-party contracts to ensure that there is transparency in the commercial arrangements, flexibility to manage changed requirements and the ability to break the contract
• Base the Budgeting process on a ‘bottom-up’ approach, identify and challenge each area of cost and supplies; undertake formal review processes, establish some Key Performance Indicators and incentivise departments to spend less than budget, rather than treat it as a spending target to be achieved

Some of the examples of government waste include:

• Energy – significant savings could be made by centralising the procurement with an expert team
• Fixed line telecoms – costs could be 30-40% cheaper if the government was to buy its own capacity rather than purchasing from various suppliers, and although mobiles are largely supplied by a single supplier, there are a myriad of separate agreements
• Printing is an area where prices are uncompetitive, and there is often a substantial differential between what has been paid, and the market price obtained by tender
• Stationery and IT are other areas where there is a lack of control and a failure to obtain ‘best value’

But it is not just the public sector that needs to improve its procedures and tighten its belt.   In many businesses, large and small, there is a similar lack of understanding of how to manage overhead costs and buy wisely.   The areas highlighted here are similar to those we often find in our work with SMEs and other organisations.   Often someone is tasked with looking at these overheads but cannot devote sufficient time, attention or, frankly, focus to do it.  

Stephen Gaubert from Auditel can fill that gap.   As we are independent of the market we can obtain excellent prices for our clients, and because there is no hidden commission or brokerage included then our advice is transparent and not influenced by the rate of commission.   We provide the detailed focus on our clients’ essential business costs, ensuring that contracts are managed, and that costs are as low as they can be commensurate with service.   Through our network of professional cost and procurement consultants there is a wealth of experience to help organisations reduce their overhead costs and provide efficiency advice.  

For further information how you can have your own ‘Efficiency review’ why not sign up for our Free Business Healthcheck before 30th November and you will be entered in a draw to win a new Apple iPad.   Contact Stephen Gaubert now to find out how Auditel can help you lower the cost of doing business - call 020 8482 1370 or 07785 340 280, email stephen.gaubert@auditel.co.uk or visit www.auditel.co.uk/stephengaubert

• Offer bonuses and other incentives for noteworthy conservation, and circulate copies of your firm’s energy bills to remind employees of your commitment to reducing costs in this area
• Ask employees to turn off and cover up all equipment at the end of every day where appropriate – this not only saves power but also extends the life of your equipment
• Install time clocks to control heating, air conditioning, and lighting
• Turn the temperature setting on your thermostats down during the winter and, if you have air conditioning, up during the summer
• Your offices could be over-lit in areas such as storage rooms, south-facing offices, or the staff room. Remove bulbs or fluorescent tubes to bring lighting down to an appropriate level
• Encourage employees to turn off fluorescent lights when they leave a room for more than fifteen minutes, and incandescent lights if they leave for three minutes or more
• Reduce bulb wattage wherever possible
• Replace standard fluorescent and incandescent lights with high-efficiency fluorescent light, which gives the same light output and can save up to 80% of the energy according to industry estimates
• Install 5-minute shut-off switches in stock rooms or other little-used areas
• Appoint a specialist to review your utility bills in case you are overlooking something

This last point is perhaps the most important, and should be the starting point for any energy review.   Auditel can help organisations of any size to better manage their energy costs.   As we are independent of the market we can obtain excellent prices for our clients, and because there is no hidden commission or brokerage included then our advice is transparent and not influenced by the rate of commission.  

Through our network of professional cost and procurement consultants there is a wealth of experience to help organisations reduce their utilities costs and provide energy efficiency advice.   For further information contact Stephen Gaubert now to find out how Auditel can help you lower the cost of doing business - call 020 8482 1370 or 07785 340 280, email stephen.gaubert@auditel.co.uk or visit www.auditel.co.uk/stephengaubert

The stationery budget in most organisations is highly decentralised, with each department having its own preferences.   Key to reducing the costs of stationery is to establish greater central control of the items that can be bought, and ensure that there is a clear difference for those items needed for internal use, and those for external distribution.

Equally important is to ensure that there is a strict control of the suppliers being used and  prevent each department having its own suppliers and claiming through Petty Cash – whatever savings that might be obtained through haphazard purchasing will be more than eliminated by the additional cost of managing the payment of multiple suppliers and staff expense claims.

Stock control is equally important; one recent analysis identified the following issues:

• 20% Pilferage – Office supplies often go home with employees as perceived fringe benefits.
• 5% Obsolescence – as supplies become obsolete, they lie on stockroom shelves.  For example the seals on the envelopes start to yellow and no longer stick.
• 10% Waste – too many office supplies are wasted and can be found in desk drawers.
• 5% Accounting – keeping accounting records, paying suppliers and charging back to departments contribute to the overall costs.
• 25% Purchasing – Purchase orders, product investigation, buying records, seeking quotations and chasing deliveries are a hefty portion of the overall costs.
• 35% Storage – inefficient stocking, keeping records, labour and distribution accounts for the majority of office supplies costs.

Adding up the costs, you discover that the real cost is an additional 100% higher than its original purchase price.   This means that for every £500 of office supplies you buy it can cost your business over £1000. 

The cost of the raw material of many stationery items – paper – has risen substantially; for example the price for 80gsm paper will be rising between 8%-12% from 1st October, with the prices of other stock items going up by even more.   The reason for the price hikes, apparently, is a set of unprecedented market conditions: a combination of decreasing volume year-on-year, challenging exchange rates, increased pulp prices and lower selling prices for cut paper across Europe compared with China and the USA mean mills are constricting supply to Europe, pushing prices up.   

The result, of course, for any business using paper – and I would guess that means pretty much any business of any size – will be a bigger stationery bill at the end of every month, unless they take steps to mitigate the higher prices.   In the immediate short term, the quickest results would come from encouraging staff to value paper more highly – not easy when it has been seen as such a cheap and disposable commodity for so long.   Initiatives could include, for example, by setting their printer to duplex (double-sided) printing as default, or by saving/filing their emails into electronic folders for future reference rather than simply printing them out.

In the medium and long-term you should implement a thorough review of your paper purchasing policy.   Are you with the right supplier?   Could you use a cheaper brand?   Could you buy in larger quantities?

How Auditel can help

Through its network of professional cost and procurement consultants there is a wealth of experience to help organisations reduce their stationery costs without impacting quality and service.   If you work with Auditel they will look after your stationery and business consumables overheads by carrying out regular reviews and make recommendations to optimise your purchasing as an integral part of their ongoing management service.   Auditel have recently developed some tools to streamline the process of analysing your invoices to help identify the opportunities for savings.

To find out how Auditel can help you improve your cost management and cut the costs of your business contact Stephen Gaubert – call 020 8482 1370 or 07785 340 280, email stephen.gaubert@auditel.co.uk or visit www.auditel.co.uk/stephengaubert.

Waste Disposal

Year on year landfill tax has been increasing and will continue to increase in order to hurt businesses financially to drive change to meet the Government’s environmental targets.  Your organisation needs to ensure that it is equipped to meet these challenges and be in a position to demonstrate how you are controlling your waste management.   You will be required to demonstrate robust data reporting, whilst providing the fully compliant environmental audit trial needed to show how you are managing and improving the environmental credentials for your organisation.   There is increasing evidence of businesses being fined for non-compliance.

Landfill Tax is increasing by £8/tonne a year from the current level of £48 to £80 in 2014/15 – this is a direct cost to business as it passed on by the Waste Management companies.   The impact on industry (and on local government) is that the costs of disposal to landfill will continue to outstrip significantly even inflationary increases for the next 5 years with a corresponding reduction in company profitability.   To offset these costs business has a number of options.

• Negotiate cheaper rates from its waste collection/disposal suppliers
• Reduce the amount of waste going to landfill by recycling some or all of its waste
• Introduce operational processes that reduce waste and/or make the storage/collection/transportation of its waste more efficient.

Whilst there is certainly scope for savings through a competitive procurement process the first step is to determine the composition of your waste stream and then develop a practical solution based on the specific circumstances and local waste management infrastructure.

Recycling

The opportunities for recycling are there – from paper and glass, through to plastic bottles and metal.  

One example is to harness food waste – on Tuesday Centrica opened the UK’s first green gas pilot at Thames Water’s sewage works in Didcot, and is planning to bring a second project online at the end of this week at Adnams brewery in Suffolk; three more pilots are due to come online next year

Each facility will produce enough renewable gas to power 200 homes a year.   The £2.5m Didcot facility uses an anaerobic digestion system to turn sewage sludge into biomethane.   Impurities are then removed from the biomethane before it is fed into the gas grid.   The whole process – from flushing a toilet to gas being piped to people’s homes – takes about 20 days, said Centrica.

The completion of the pilot project represents a major step forward for the green gas sector, which according to a National Grid study could account for at least 15 per cent of the domestic gas market by 2020.

How Auditel can help

Through its network of professional cost and procurement consultants there is a wealth of experience to help organisations reduce their waste costs, ensure their compliance and enhance their CSR credentials.   For further information contact Stephen Gaubert now to find out how Auditel can help you lower the cost of doing business - call 020 8482 1370 or 07785 340 280, email stephen.gaubert@auditel.co.uk or visit www.auditel.co.uk/stephengaubert