Do you really know who’s spending your money in your company? Or what they’re buying? Or whether they’re getting their money’s worth? There’s only one way of finding the answers to these questions. In tough times, it should be standard operating procedure for the owner or CEO of the business to personally sign every check for every expenditure.
Many of you do this already. If you aren’t signing the checks, try it and you’ll be astonished at what you’ll find out. Where did those extra 30 boxes of coffee filters come from? Who ordered eighteen shipments of ball point pens? Why is there a car rental bill from an agency in the Bahamas, when all your clients are in Milwaukee?
It’s likely that you’ll find a significant amount of waste — the remnants of extravagant practices that date back to better times, but can’t be justified under present conditions.
Just in time, the owner of a financially-troubled travel agency took control of his company’s checkbook, and discovered a variety of disturbing activities. There were prompt payment discounts that could have been taken by his business, but were not because the bills were paid late. Other bills, meanwhile, were being paid before they were due. The company was missing out on quantity discounts because orders were not being consolidated. Employees were working overtime, at premium pay, during periods when there should have been little for them to do. Simply by getting a handle on the obvious waste, the owner was able to maneuver the agency back into the black.
In another case, a company regularly ordered bottled water for its employees. It was a little office luxury that had begun several years earlier when business was booming. As soon as the owner started signing the company checks, he realized that this “little” luxury was soaking up $250 a month–money could certainly be put to better use by the cash-strapped company. The owner promptly canceled the deliveries, installed water purifiers on the faucets of the office, and reduced operating costs by almost $3,000 a year.
The owner of a firm with almost 60 employees had a real brainstorm the first time she wrote out the monthly check to pay the company’s health insurance policy. The business was paying premiums for every one of them. Certainly some of these employees were covered under their spouse’s health insurance policy?
The owner checked it out and, sure enough, the company was paying premiums to duplicate coverage for over a dozen people. Now employees who receive health insurance benefits at this firm must first sign a statement certifying that they are not already covered by their spouse’s policy. The bottom line is that the company was able to reduce its insurance costs by more than $35,000 a year.
