Saving Money Without Spending Money: Profitability With Your CFOOct 29, 2021
When you hire salespeople, their job is to increase sales and bring in revenue. Your CFO is meanwhile thought to protect the firm’s assets, managing financial functions and reporting. No question this is important – but how does it impact the bottom line?
In this article we’re exploring some tactics and practices that your CFO can use to recalibrate how your company manages benefits, utilities and more to increase profitability, disrupting the status quo without disrupting the way you do business.
Two Ways to Improve The Bottom Line
One way to improve the bottom line is perhaps the most obvious, and is where most companies spend the most energy and resources: improving sales.
When you hire salespeople, their job is to increase sales and bring in revenue. This cause and effect is well understood, so it makes sense that companies invest in making sales successful. Sales training, new hires, refining best sales practices, CRMs and other technologies to assist with sales functions – all are essential ingredients to most organizations’ playbook. Moreover, many decision makers come from the ranks of sales. Managers, executives and senior leadership often worked their way up from proving themselves as capable sales people.
A second, less understood but no less important way to improve the bottom line is protecting the firm’s assets. Here’s where your CFO and their unique skill sets come into focus.
Budgeting, expense and cash flow control, reports and records – unlike sales, these activities don’t bring in revenue. Yet, your CFO should have an attitude of asking how can I help improve the bottom line? One way is by identifying cost saving ideas that are impactful but not disruptive to the business. Think about a year end performance review – when a CFO can do more than say, “Yep, audits are in hand, bank relationships are sound, budgets and plans and forecasts are full steam ahead,” but can also add, “and here’s how the bottom line has been improved,” it becomes a different conversation.
Tactics and Practices for Saving Money
Let’s identify a few unique ways the CFO can more directly contribute to profitability.
Reimagine Healthcare Benefits
Healthcare benefits continue to grow more expensive, increasing for 5% to 9% annually. As this expense grows, more and more organizations are looking for ways to put more of the financial burden of benefits on their employees. This certainly doesn’t help morale or employee satisfaction – a 5% raise can get eaten up in new healthcare costs.
New, innovative solutions are helping to meet this challenge, which can reduce health insurance costs, often improving employee benefits without increasing employer costs or requiring a change to your healthcare provider. Your CFO should be aware of the new approaches to familiar issues. If they aren’t, reach out to us – we’ll be glad to explore more.
Outsource HR functions
Many organizations use a PEO, a Professional Employer Organization, which allows them to outsource a number of human resource functions like payroll, workers’ compensation, retirement and more. PEOs can be very useful – and expensive.
Today new solutions are emerging to disrupt the status quo of PEOs, transforming 401(k) services. A Professional Employer Organization might be the best solution for you. But exploring alternatives is smart business.
Utilities, Management and More
Benefits and HR aren’t the only business processes under disruption. Storage of important documents, and their ultimate safe destruction, is another industry where innovators with more flexible, potentially more affordable solutions are creating new space.
Where power and utilities are concerned, there are contract variations that can save significant money, cutting costs per kilowatt almost in half. For manufacturing companies this can be a powerful advantage. With some ingenuity and creativity, your CFO can help uncover new ways of saving money.
Saving Money to Make Money
More than new solutions themselves, it’s important for organizations to have an attitude of discovery. Just because a process or practice is familiar doesn’t mean it can’t be improved upon or replaced entirely with new, more powerful functions that, while disruption the marketplace, don’t disrupt your business. Look to your CFO to be a leader in this discovery process, or seek the guidance of those, like ProCFO Partners, who can help.