I feel very fortunate to know an extremely successful business person. Everything they do always seems to come up smelling of roses. Unfortunately for me, this person isn’t a relation of mine but he does give very interesting advice and point of views, one being: ‘The speedy movement of money is the key to success’. With this, he gave me a couple of examples of putting it into practice.
The second example is what I want to concentrate on throughout this blog; making our cash work harder for us.
In this very challenging time for all organisations, there are some things that procurement and finance managers can do to try to minimise any potential cash being wasted.
The area I want to focus on is in-direct costs. These are the costs for everything else apart from the cost of sales. But why focus on this area?
Naturally, cost of sales and direct costs are often better managed as they are linked directly to revenue, to gross margins, to targets and to the headline figures that analysts and stakeholders measure a company on.
Indirect costs tend to take a bit more of a backseat from management but can account for a very significant part of the profit and loss statement. In my experience, even a very small business will have over 30 separate categories of expenditure that are sometimes not budgeted for and can be incurred without approval.
Of course, I am going to frame these recommendations in the context of Microsoft Dynamics 365 for Finance and Operations, but these can also be applied to businesses of all types, no matter what type of finance system you are using or industry you operate in.
If you do not use purchase orders with workflow approval, then you should. If you use them already, lower everyone’s authorisation limits. Think about your workflow configurations and how you can modify them to be that little bit more frugal.
Your employees will still need to claim expenses for necessary expenses. We need to make sure the wheels are still turning and sales are being made. However, make sure you can bill them to clients where possible by enforcing very strict timelines on submitting those claims. Businesses across the UK lose millions each year in un-billed expenses due to tardy submission and slack policing of expenses. You should look at your expense policies and how they can be mirrored in Microsoft Dynamics 365 for Finance and Operations. Are you making the best use of the mobile app to encourage quicker claiming?
If you do have to spend money, for example on stationery, then is this the best stationery that you can get for your money? Can someone else provide you with the same quality for less? Or, can you get better pens and paper for the same price from someone else? For this we can look at the use of ‘Cases’ in Microsoft Dynamics 365 for Finance and Operations and allocating a task to a user to investigate other potential suppliers.
In a time of such uncertainty, it is a worry what businesses which are around today will be around tomorrow. For example if your office cleaners went out of business do you know of a different firm who could come to clean the office going forward? Do you know their pricing and whether or not they’re reliable? Surely it is better to find out now because, as my granddad would say ‘forewarned is forearmed’.
Why not use the Tender functionality in Microsoft Dynamics 365 for Finance and Operations, a very underused part of the system that can reap enormous rewards?
Review and scrutinise the number of direct debits and standing orders leaving your bank each month. This sounds simple, but by focussing your attention to every piece of expenditure, you will build up a picture of where money is leaking out and where it can be stopped or made better use of. Standard reports, Power BI and the native integration to Excel can all be used to gather this information quickly and easily. Are you using it?
I haven’t gone into the exact details of how Microsoft Dynamics 365 for Finance and Operations can help you for a very good reason – our focus right now is staying safe and healthy. Also, you know your business better than anyone, but do you know it the best that you can do? Hitachi Solutions are on hand to show you some more areas where you can optimise your Microsoft Dynamics 365 for Finance and Operations platform in these uncertain times. Let’s work together to pull us all out of this as soon and as successfully as possible.