Are All Those Expenditures Necessary?

If you own a house, unless you are unlike most people you find after a fair amount of time that clutter appears. Interestingly, when you decide to do something about it the initial reaction can be a feeling of being overwhelmed. That is why one of the recommended ways to reduce stress is to de-clutter. Likewise, clutter is something that creeps into every business at some point, especially when it comes to unnecessary expenditures.

Paper Everywhere

A typical area a business becomes cluttered is with paperwork. When it comes to records, the same thing can happen with digital files. I touched on this issue in the blogs Purge, Purge, Purge and Organize – Everything in It’s Place. Here though I’m more concerned with something other than the mess and stress of disorganization.

Why Do We Have This Stuff

One of the dangers of not staying on top of organization is the risk of having too much of things and duplication of supplies and effort. For example, if your company carries inventory then it is imperative that inventory is regularly reviewed and excesses addressed. There is an old idea among auditors of doing a dust test in which they literally run their finger over inventory to see how much dust has collected. The idea of course is that when inventory turns over sufficiently fast then there shouldn’t be much dust collecting. Of course, inventory is an obvious issue, though often overlooked. But there are other things that may not be so obvious.

Supplies

Have you ever been in a company store room where there are more file folders, tape, staples or whatever than could possibly be used in a year. This is not uncommon and represents two key things; poor purchasing control and wasted resources (particularly cash). This is a time when the economy is very unsympathetic to waste.

Services

It is also not uncommon for a company to still be committed to services that no longer serve a valuable function. That could be things such as excess phone lines, printed publications, and email updates. There are of course more, but these are the kind of things that are easily overlooked. Just think about it in your personal life. How many emails are you continuing to receive about some subject that you thought would be helpful but no longer are? In fact, many things (especially emails) start coming as a result of signing up for some other service. For example, in the investment arena you may sign up for an investment newsletter and all of a sudden you are inundated with other communications of little or no usefulness. How much of this is going on in your company as well? Are those publications and emails really being used by anyone or even of any value at all? If not, they represent clutter and unnecessary expenditures and also cost you the most important resource – your time.

Employees

This is a touchy area, but it is also not uncommon for a company to find itself with employees filling rolls that are no longer needed, could be consolidated with other rolls, or are simply redundant. Don’t misunderstand. I’m not saying get rid of a bunch of people, but rather encouraging you on a fairly regular basis to look closely at what people do and see if there are better ways to operate. You may have someone clamoring to hire more help when all that really needs to be done is to move some people around.

Incidentally, along this same line is making regular reviews of processes and procedures and making modifications to get rid of the outdated or to improve efficiencies,

Are you being deliberate about keeping your eyes open for excesses and misuses, whether it is inventory, supplies, services, employees, or processes and procedures? If not, I encourage you to eliminate unnecessary expenditures now and make it a habit to do this on a regular basis.

If you want to know more, contact AimCFO – Contact

As always, your comments are welcomed.

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