Keeping costs down is always an imperative for Finance Managers. And right now, in times of COVID, it’s more important than ever. Many Finance Teams worldwide are being tasked with further reducing expenditure. So where do you find that extra 10%, when you’ve already tried everything?
We spoke to Ruth Fletcher, CFO of CurrencyFair, who shared her tips for cutting costs. But without affecting service, your company’s output or growth.
An Award-Winning CFO
Ruth is an award-winning finance professional, with decades of experience. In 2018 she picked up two awards - CFO of the Year (at the Women in Finance Awards) and Fintech Leader of the Year (at the Women in Technology Awards). She has extensive experience within finance functions, and worked her way through the ranks from Finance Manager to CFO. She’s therefore very well placed to provide some advice for saving costs.
5 Tips for Keeping Costs Down
#1. No Finance Manager is an island.
Finance departments of the past worked as an “island”, detached from the day to day operations of the business. And especially from the commercial part of the company. But ultimately, if one department fails then the other departments fail as well.
Ruth’s advice is to embrace working closely with your colleagues in other teams. It’s especially important to get to know your Heads of Department, and collaborate with them throughout the year. This allows you to have conversations about costs, and influence decisions when they are actually taking place. That way, you can more easily find out where savings can be made, and coach colleagues through the process of cutting costs.
“Make sure they know they can talk to you, and come to you with ideas or issues. Be a partner to the business.”
If you build great relationships with your colleagues, they will be more open to feedback from you.
#2. Build your own professional network.
Ruth stressed how important it is to develop your own professional network. Look for mentors both outside and inside of your organisation. And don’t be afraid to ask for help if something unexpected comes up, or if a situation arises that you’ve never faced before. For example, let’s say your CFO asks you to find a better way to manage employees’ expenses. One of your contacts might have implemented a great strategy that ended up saving costs. You can learn from your peers’ tried and tested money-saving initiatives.
A great network is also useful for finding out about new products and services that could save on budget. It’s a place to get unbiased advice on what tools or hacks other finance professionals are trying. People are more likely to share these with you when they know you personally.
If you’re not sure where to start, Ruth recommends starting with your own professional accountancy body, of which you are a member. Connect with fellow members on LinkedIn or attend their webinars where you can often submit questions in advance. Webinar panelists or other attendees often share their experiences which will most always be similar across most companies. Ruth also mentioned that it’s always worth keeping in touch with past colleagues as well. You never know when a connection might come in handy.
#3. Know the drivers on your cost base.
Most Finance Managers will be well aware of the importance of understanding your cost base.
“Don’t wait until you need to know, or you’re asked. Always know your revenue. Understand your cost base, and where you can make changes if you need to.”
You must know what’s driving everything, so that you can talk from an informed position with Heads of Department across the business.
Ruth counsels working with colleagues to understand the return on investment for every cost, and being ready with recommendations on how to make things work in a more cost-effective way. For example, keep tabs on subscriptions. Are all of them strictly necessary? If so, when are they up for renewal? If you know what’s coming, you’re less likely to rush into making a bad decision or agreeing to sub-optimal terms.
And look at every cost. For example, businesses still using banks for currency exchange could be paying eight times more than they need to. If you operate globally and regularly pay people overseas, or take payments from customers in a different currency to your base, then there are vast savings to be made. FX providers like CurrencyFair offer smarter ways to transfer money, as well as a real customer-focused approach, which helps finance teams to get a handle on costs.
Know what can be done using automation, negotiate with suppliers, and find more competitive suppliers or rates if you can.
#4. Find new ways of working.
Ruth mentioned that during the recent lockdown, her Finance Team created a full view of costs across the organisation. This holistic overview allows them to tackle a new topic each quarter, and make improvements.
And treating this work as “mini projects” has been motivating for the team, especially during an intense period of remote working. Everyone gets on a call to talk through ideas for the next project, someone researches the topic, and the team then comes back together to discuss and agree on the next focus area.
Whatever way you find to work, remember that knowledge is power. Ultimately, it’s all about getting a good handle on your cost base.
#5. Overcome inertia
Even in busy times, don’t go along with the status quo because it’s easier. Look at your hidden costs. Explore renewals, subscriptions, processes. Constantly review what you’re doing, and look into whether there are more cost-effective ways to work. Referring back to our FX example above, calculate the cost of doing nothing versus moving to a smarter solution. It might well be worth the time and effort to switch.
And encourage your colleagues to put a value on their time. They should question every task they do and ask themselves - is it more cost effective to keep this in-house or should we be looking to outsource? What value are we adding by keeping hold of these responsibilities? Bringing in external specialists could free up precious time for employees, time which can be better spent on tasks where they add most value. A great example here is payroll. It’s something that just needs to be done. Does it need to be done by your own Finance Manager with her vast experience and knowledge of the business? It may be more cost-effective and efficient to outsource. And don’t forget the opportunity cost of not tapping in to external expertise. If you bring in external support, you’re adding to your pool of specialists.
It’s important to break the inertia. As the saying goes: “If you always do what you always did, you will always get what you always got.”
How to cut costs and influence people
What if you know you can make a saving, but you need to convince someone to make a change? Ruth advises communicating as much as you can, and bearing in mind that not everyone is finance-oriented. For that reason, she recommends making each saving relatable. For example, we mentioned that using an FX provider could save you cash. Take the time to work out the actual saving on a monthly basis. Present this to your boss. Perhaps this means you can invest in some new software. Or take on a new full-time employee to manage a new project that no-one else has time to deliver.
As Ruth says, “Finance isn’t all about saying ‘no’ to the cost. It’s about making it relatable.”
Are you considering introducing a new FX provider to your business? Why not sign up and experience the benefits that CurrencyFair Business can offer?