NFIB

Ways to Keep Office Expenses Down
03/ 05/ 2002


Remember, every dollar you save in office expenses falls all the way to your bottom line. In today's competitive economy, a business can gain an edge by keeping costs low. Today's Workshop, by Jeffrey Moses, discusses a few ways to help accomplish this.

First, don't order new supplies or materials until current supplies are running low. It's always a temptation to stock up after a big check comes in. You feel confident, and flush. But control your urge. It's better to buy when you need something specific, or when something is being offered at a true discount. Note: don't buy something just because it's on sale. Buy only the things you need, when you need them.

The one exception to the above point may be at year-end because all deductible business purchases will affect your tax situation in April.

When ordering from suppliers, don't let them talk you into buying more than you need "just so you won't be bothered with placing an order again soon." If your company has assigned the process of purchasing to a specific individual or group, make sure that you keep track of the process.

Don't let suppliers make refills automatically, based on your previous orders. This is a sure way to overspend.

Don't let staff assume that even frequently used items can be purchased without approval by ownership or management. This includes reams of paper, printer and copier cartridges, computer disks, etc. Even these everyday items should be purchased in an orderly, controlled program that holds costs in check. Any company of size would benefit from assigning all purchasing to one person, who can maintain control over all office spending.

Don't keep an unlocked, open-door storeroom—unless you've carefully thought about why you're doing so. Sure, it's nice for staff to be able to wander into the storeroom and gather all the paper, pens, and whatever else they may need at work. But the annual cost of "extras" that disappear would probably surprise you if everything were accounted for. Studies have shown that employees will take home with them everything from paper clips to reams of paper to major office equipment, when given the chance.

Why would you consider having an open storeroom? Perhaps so that staff can feel "luxurious" and "comfortable" knowing that the company is doing well enough to provide this service. Or perhaps because every employee is so trusted that problems with "borrowing" never arise. If you company is small, with only a few employees, this may work out. But if you are growing and adding employees regularly, this is ill advised.

When dealing with suppliers, always try to get a price reduction. Ask for discounts of 10 percent or 20 percent -- you just might get them. But be wary of signing long-term contracts with suppliers, unless you receive a very deep discount. Your needs may change, and it could be hard to alter a contract that's already in place.

The owner of the company should monitor as many office expenses as possible. This means at least reviewing checks as they're written, and spot checking purchases from time to time. It also may mean monitoring phone bills to see if long-distance personal calls are being made. This is a problem with almost any company of size. If you find a problem, reprimand the individual immediately and issue a warning to all staff.

Large purchases, such as desks and chairs, computers and copiers, or furnishings such as carpets, should always be bought through a centralized purchasing process.

Buying computer technology can be difficult for managers who aren't computer savvy. Do you really need all the upgrades that your information teams are asking for? How do you determine what and when to buy? It could be a good idea to call in a consultant -- but not one who also sells computer equipment or software.

Purchasing, in itself, is a science that can be learned, just as can any business skill. Books on the subject may prove useful, and could pay for themselves during the first purchase. Some books of note (all of which can be purchased online or in your favorite bookstore):

1. Profitable Purchasing Strategies : A Manager's Guide for Improving Organizational Competitiveness Through the Skills of Purchasing, Paul T. Steele, Brian Court (Contributor), $34.95, May 1996,McGraw-Hill
2. The Purchasing Handbook by Harold E. Fearon(Editor), Donald W. Dobler, Kenneth H. Killen(Editor), $84.95, October 1992, McGraw Hill
3. Handbook for Buyers and Purchasing Management by Harry E. Hough, James M. Ashley (Contributor), $84.00,September 25, 1992, Prentice Hall

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