Third of firms miss out on cost savings

5 July 2009

06 July 2009 | Allie Anderson

UK businesses are failing to take advantage of cost-cutting opportunities in the wake of the recession, according to a report by researcher YouGov.

A survey of more than 1,300 companies conducted by the firm found more than a third had taken no steps to save money. This was despite 84 per cent recognising cost savings could be made.

The study quizzed businesses of all sizes across a number of sectors. It focused on the main areas of spending including office and industrial supplies, logistics and services. Lack of time and insufficient resources were found to be the major causes of companies failing to examine cost-cutting measures.

Almost half of respondents (46 per cent) had not instigated contractual negotiations with suppliers. Of those who had, only 36 per cent secured a reduction in prices and 16 per cent extended payment terms. Robert Allison, managing director of consultancy Expense Reduction Analysts, which commissioned the survey, said the findings came as no surprise.

He suggested companies have a lack of cost-cutting expertise.

"Most financial directors are more focused on core strategic costs such as raw materials or direct inventory," he said.

"Invariably, what it leads to is the individuals responsible for day-to-day purchasing are often people who are unqualified and have no proper training or support. Real cost saving opportunities are going begging."

Allison said many companies could take simple steps to slash costs. These include analysing market costs and checking if suppliers are offering the same prices they grant rival firms.

Redirecting attention, and funds, to better management of spend could have a significant impact on long-term profit, the report said.

SMjul2009

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