Beyond the Numbers - Cost Control

1. Volume.1:.Issue.1
Beyond numbers
the
Build your business on our foundation. SM
this process is identifying these costs
and exploring ways to reduce them.
Internal Controls
Look around your organization and
examine your procedures—are there
ways you can reduce waste or increase
efficiencies? Even small things like
printing fewer documents can lead
to reduced paper and toner costs.
Encouraging the involvement of all
team members and tracking everything
in your office can help reveal where
savings exist.
Take All Discounts
If you receive a discount for paying
invoices early, do all you can to take
It’s All About (Cost) Control advantage of those savings. Even
discounts of two or three percent can
O
ne of the biggest Variable costs are those that increase begin to add up.
challenges facing staffing or decrease in response to the level of
agencies today—or any business activity, and while some are Worker’s Compensation Expenses
company for that matter—is cost harder to control than others, there are After employee wages, Worker’s
management. The cost of doing ways you can work to reduce them. Compensation is a staffing agency’s
business gets more expensive each Closely managing variable costs can second largest expense. The number
day. While there are some fixed costs help your firm become more efficient, one way to control this expense is to
that are more difficult to manage which in turn can allow you to more lower your Worker’s Compensation
(rent or property payments, salaries, easily invest in things such as future modifier by reducing your claims. One
etc.), there are other variable costs growth or better compensation for effective way to reduce your claims
that staffing agency owners and team members that contribute to your
managers can actively control. company’s success. The first step in ............................... see.Control,.page.4
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2. Beyond numbers
the
When Time Is Money: is your Aging Report, which Tricom
provides on a weekly basis or is
Shortening.Your.Receivables.Timeframe. accessible at anytime online. Look
closely at the Invoice Payment Average
T
he old business cliché “time So how can you better (IPA) on the report. This number
is money” is never more manage your receivables represents the average number of days
true than when talking about without jeopardizing customer it takes your customer to pay an invoice.
receivables. It’s the lifeblood of a relationships? First, discuss terms If your customer normally pays invoices
staffing business. But you have to keep with customers up front. Be clear within 33 days, but has stretched to
that blood flowing to keep the business about your expectations and detail 45 days, that can be a red flag. More
strong. The longer a customer takes them in a signed agreement. This way often than not, you’ll find it’s usually
to pay an invoice, the higher the cost you both have a clear understanding an issue with the invoice or problems
to your business. Essentially, your of the expectations, and you have with processing invoices on their end.
customer is using your money—money supporting documents to reference in However, it can also be indicative of
that you could be using for other things, case there are any questions. cash flow problems, which can result in
or earning interest on. And, depending much larger costs to your firm. Another
on how your funding is structured, you For existing customers, use the tools indicator to watch on your Aging Report
could also be paying interest on those available to you to work within your is underpayments. A customer may
outstanding receivables. existing terms. One such tool to use underpay an invoice if the rates are
wrong or if there’s a timecard issue with
an employee. Closely monitor why these
underpayments are occurring.Follow
up on them to ensure that any issues
are resolved so that payments can be
remitted in full.
When customers are behind in their
payments (especially if you sense a
pattern forming), don’t be afraid to
use collection services or the free
receivables management service Tricom
Funding offers our clients. Tricom calls
on behalf of you, the client, and does
not disclose that we’re calling from
Tricom. As we call to check on payment
status, our approach is soft—not
aggressive—so you can be assured that
your customers continue to receive the
same standard of service they’ve come
to expect. If you opt to follow up on
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3. outstanding receivables yourself, be
sure to ask for the following information:
How Tricom Funding
when the check is being mailed (not Can Help You Manage Costs
when it’s being cut), the check number, (And The Service Is FREE For Full Service Clients!)
check amount and invoices it’s paying.
T
Keep detailed notes on each customer ricom Funding is always on the lookout for ways our expertise
you speak with including the name, date might be of assistance to your staffing agency. We talked about
and time of the conversation, as well our free receivables management service as a way to shorten
as what was stated. Don’t be afraid to your receivables timeframe in the feature “When Time is Money.” Featured
question customers on what’s owed to below is another such offering geared toward helping you manage costs
you. You both agreed to the terms at the more effectively.
beginning of the relationship, and you
have a right to follow up on those terms FREE Financial Statement Preparation:
in a courteous, respectful manner. There’s no need to pay an outside accountant to prepare your financial
statements—it’s free for full service clients.
Another important aspect of receivables
management comes after the invoice Our Accounting staff is second to none. Plus, as your partner we’re already
is paid. If you’re working with a an integral part of your company’s financial picture. So it’s a natural
funding partner other than fit to have Tricom Funding prepare your financial statements.
Tricom Funding, be aware
of how much time it Simply provide your check register along with an
takes once a payment explanation of what the payments were for and a bank
is received until the statement. This information allows us to prepare a
invoice is actually monthly financial statement with the following:
credited. With some • Balance Sheet
funding providers, • Income Statement (Profit & Loss Statement)
there are clearance • Actual to budget (when a budget is provided)
delays during which • Year over year comparison
time you still pay interest. These reports will provide you with invaluable tools
These can be anywhere to better manage your business, and allow you to make
from two to seven business days informed financial decisions for your company. For those clients
from when the payment reaches the who are currently using a bookkeeper or accountant, why pay additional
lock box until the time it’s credited to the fees (up to $150 per hour) when this service is offered to you at no cost?
invoice. Review your funding contract Frequently, RFP’s require financial statements, and the information will be
carefully and monitor your receivables available at your fingertips instead of being held by your accountant or
closely. Tricom clients are able to bookkeeper. In addition, financial reports at year-end may significantly
monitor their receivables in real-time by reduce your tax preparer’s time and thus cost you less for your tax
accessing their accounts online. We post preparation. For more information about Financial Statement
receivables the day they are received, Preparation, please contact Mary Jo Heim, Director of Accounting,
six days a week, so clients can see at 262-509-6214 or 1-800-348-4815 extension 214, or via email at
exactly which invoices have been paid mheim@tricom.com. n
and when. n
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4. Control......................... cont..from.cover
is to implement a Risk Management
Program through a service provider
or by designing a program in-house.
A Risk Management Program will give As tough as it may be to admit,
you tools to review current and potential
customers to assess their level of risk.
not all customers are
Based on that assessment, you may created equal. Some may not actually
decide that their risks are too high and
choose not to do business with them,
be profitable at all.
or you may make recommendations
to help reduce those risks. These qualifying for unemployment benefits, fresh with someone new. Again, this
recommendations are also used in and knowing the rules is half the battle is with the understanding that both
ongoing training for your staff. For in controlling unemployment expenses. candidates are equally qualified for
example, you may do an assessment Oftentimes there are seminars you can the position.
of a customer and find that their forklift attend to have these rules explained. 5. Finally, if you find that keeping up
operators have to work in very tight 2. Respond to notices you receive in a with unemployment claims is getting to
corners. You recommend installing timely manner. For example, someone be too much to handle, look to outsource
mirrors to see around those corners. may have worked with your firm for the process to a service provider. This
You would then also conduct ongoing a day in order to list you on their can be expensive, but if you are a large
training for your employees to improve unemployment claim, even though you agency with a lot of claims, outsourcing
their forklift skills. had work for them for an entire week or the management of those claims—and
more. By not responding to this claim, all the paperwork and court dates that go
Another aspect of a Risk Management you’re essentially indicating that you with them—can be worth it in the long run.
Program involves insurance. Insurance didn’t have work for that individual and
carriers look favorably on clients with will have to pay on that claim. Tracking Evaluate Your Customers
Risk Management Programs and will claims closely and responding in a As tough as it may be to admit, not all
often provide discounts to companies timely manner can eliminate these customers are created equal. Some
with programs in place. While there is unnecessary expenses. may not actually be profitable at all.
a cost to implement the program, in 3. Check to see if your state offers Those are the relationships that are
the long run it can help your agency voluntary contributions to change your critical to review. Is this a short-term
save money by reducing injury-related state unemployment rate. If you receive challenge or a chronic problem? Is your
claims. If you’re interested in more a notification that this option is available staff spending an inordinate amount of
information about Risk Management to you, Tricom can help you evaluate if it time servicing a customer that doesn’t
Programs, Tricom can provide you with is worthwhile to pursue. bring in much revenue or profit? While
a list of reputable service providers. 4. All things being equal, when you’re letting go of a customer may reduce
looking to place a candidate in the your volume, you may also find that
State Unemployment Expenses second half of the year, consider a it will increase your profit margin.
There are a few key measures candidate who has already been Sometimes it’s best for your business to
you can take to help contain state working with you instead of a new let go of customers that aren’t profitable
unemployment expenses: candidate. The existing employee and focus your energies on growing
1. Understand the rules of your state. may have already reached his or her relationships with those that are. n
Each state has different criteria for unemployment limit, versus starting
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