Our last few entries have given you pointers about controlling costs driven by your business travelers. Even if you are only able to get one of the ideas rolling, we know that it will impact your bottom line. So, give it a try.

Another way to help you manage expenses is to use a controlled corporate prepaid card, like PEX Card. What we mean by 'controlled' is that you control where, when, and how much your employees spend. You can limit the amount available on the card, the amount they can spend per day, or restrict the merchant categories where they can make purchases.

Here's an example of how it works:
You have an employee who is headed off on a 3 day business trip. They let you - or your PEX Card Administrator - know they will need $190 per day for lodging, $20 for personal meals, and $200 for client lunches and dinners. That comes to $410 per day or $1,230 for the three days.

Now, you log onto the administrative website, load the card with $1,230 and set the daily limit to $410. You can now restrict their card usage to travel/transportation and restaurants. Everything happens in real-time.

When they return from the business trip you can remove the excess funds from their card, and have a detailed account of all their transactions in one place.

The PEX Card helps you keep your employee driven expenses in check by giving you the tools to predetermine when, where, and how company funds are spent.

If you'd like to see PEX Card in action, click here to see our demo.

Labels: Finance Tips, Travel Expenses

In our past two posts we've discussed expense policy and how to negotiate discounts for your business travelers. Here, we'll talk about client entertainment.

Often most outlandish expenses come from entertaining clients. We've all heard a story or two about somebody ordering a really expensive bottle of wine or dining at the fanciest restaurant in town (with the price tag to match). But, how do you decline to pay those expenses when they won over a new client, or kept an old client from leaving?

I don't think there is an industry which has not been affected by our current financial turmoil. Companies everywhere are tightening their belts, and every department is pitching in to help. Your business travelers should be no different.

Take this time of belt tightening as an opportunity to talk to all of your business travelers. Whether through a PowerPoint presentation, video, or just a chat on the phone - you need to convey that the business needs their help to stay competitive in these tough times. Explain to them that every dollar saved in expenses is like earning $10 more dollars in sales (this is just an example - your numbers may be very different). And, reiterate what's already in your expense policy.

A great way to get your travelers on board is to give them the tools to make it work. The Michelin Guide is an excellent resource. Every restaurant listed has merit, and many are not only yummy and stylish, but inexpensive too. Other favorite places to find great restaurants are zagat.com and opentable.com (they have a new app for the iPhone, which is fantastic).

Client entertainment isn't going away, so you will need to give your team the tools and encouragement to keep it in check.

Labels: Budgeting, Finance Tips, Travel Expenses

In our last post we discussed establishing and enforcing an expense policy. Here we'll look at how to negotiate discounts for travelers.

Most hotel chains, rental car companies and airlines offer discounts negotiated on a company wide basis. This will take some leg work, but will pay off. Here's an example of how to negotiate to get the best deal at hotels.

• Review the last 6 - 12 months of expense reports and determine the top three hotel chains where your employees stayed (be sure to note how many room nights for each hotel).
• Determine where most of your business travel takes your employees and overlay that with a map of each hotel chain.
• Contact your top three hotel chains and talk to them about your needs, your past usage of their hotels versus their competitors (give numbers), and make sure they know that you are going to choose one chain for all of your future business. If you don't have a lot of room nights, don't worry - most will still offer you a discount.
• Once you've collected the bids you'll need to do some online research. Check out travel sites, like travelocity.com or orbitz.com and compare your bid to what is being offered online. Also check out the hotel's own website and look at their special rates and discounts. The bid you received from the hotel should be below what you find online. If it's not, call them and try to talk them down.
• Choose the hotel which offers a good discount (not necessarily the best), but also takes into account their locations and convenience for your business travelers.

Be sure all your business travelers sign up for the hotel's rewards program, and let them know that they can use those rewards points any way they like. This way your employees will be incentivized to use the preferred hotel.

Of course, there will be occasions when the preferred hotel chain does not have a unit near where your business travel takes you. This is where your expense policy comes into play. Make sure that you have a clear policy that states what the procedure is when the preferred hotel is not available.

Negotiating better rates is not only good for business, it's extremely gratifying. So, enjoy!

Labels: Budgeting, Finance Tips, Travel Expenses

They are your face to your customers. They're funny, and nice, and work their tails off to make your company a success. But, man-oh-man can they spend money!

Business travelers can wreak havoc on your budget and drive up your cost of goods sold. Over the next few entries we'll discuss a few easy steps to help you keep spending in check.

If you don't have a written expense policy, write one. If you have an expense policy, and are finding that employees ignore it you need to review it and make changes. One of the easiest ways to make sure your expense policies are adhered to is to have employees sign a document stating that they have read and understand the policy, promise to adhere to it, and recognize if they don't they will face consequences (i.e. non-reimbursement, curtailed travel, reduction in bonus, or even termination).

We have an expense policy template that can get you started or give you a few ideas to improve the one you already have. Click%20here%20to%20download%20the%20expense%20policy%20template.

Labels: Budgeting, Finance Tips, Per Diems, Travel Expenses

Figuring out a budget is as necessary as it can be annoying. Some fixed costs are easy and other elements, such as sales numbers, can require a crystal ball. Yet without a budget, even the most profitable business can mismanage funds and fail. A successful budgeting process is one that creates an effective plan requiring the least amount of time spent.

The first step in creating a successful budget is realizing why some budgets fail. Inaccurate forecasting, whether done out of misinformation or desire for personal gains, can stymie any budget process. Harvard’s business school’s publication, Working Knowledge http://hbswk.hbs.edu/item/2647.html, has a great article explaining how this can happen.

This inaccurate forecasting doesn’t have to happen in the first place, and if it does, it can be fixed. A budget that has room for adjustment as the year goes along is more likely to be useful than one that is static. There will be unexpected costs but they can be factored in, as seen in the example of the San Diego Zoo used by CFO.com http://www.cfo.com/printable/article.cfm/4124788/c_4125297?f=options.

Another way to construct a more useful budget is to create stronger connections between the corporate strategy and the budget http://www.cfo.com/whitepapers/index.cfm/displaywhitepaper/11877469. Decide what the organization needs and what doesn’t contribute to the overall plan of the business. This means that the budget is not just being used to document expenses, but to hone in on the most important expenses and weed out unnecessary ones. In this way, budgeting can be a tool for maximizing efficiency.

By planning out how the budget is going to be used, and paring down the process to just what is needed, the budget will be easier to create and use.

Labels: Budgeting

How do you stay competitive when your sales are stagnant or dropping?

Cutting costs decreases the cost of goods sold - giving you a bigger profit margin.

Increase your marketing efforts. Most of your competitors are slashing the marketing budget and decreasing their exposure - this is your chance to outshine them and gain new clients and customers. Take a look at your website and make sure it's optimized for organic searches (SEO).

Expand your PR campaign to including pitching stories to local newspapers about how your product can help people save money. If you're doing the PR yourself - this is free.

Improve your product to make it more attractive to customers. Have the product development and marketing teams determine which improvements will make the most impact in the marketplace and to the bottom line.

Don't shoot yourself in the foot.

• Don't decrease your customer service to the point where customers can feel it.
• Don't put off equipment maintenance (repairs are more expensive by far).
• Don't decrease the quality of your product.
  

We hope you've found this series to be helpful. If you'd like to share tips of your own, please send us a comment.

Labels: Budgeting, Cash Flow, Finance Tips

Remember when the two things that crowded your mail box were catalogs and credit card offers? Have you noticed how few card offers there are these days? I'm sure all those trees are happy, but for the rest of us it's proof of what we already knew - the credit crisis has affected us as well.

We've been hearing it from our customers and reading about it in the papers - businesses are moving to a cash model to pay for regular expenses. They want to conserve their credit line for important things like emergency repairs for equipment or an upgrade that will make them more competitive.

The big question is - how do you make this happen?
If you're a small company, with less than 100 employees, you are at the highest risk to fraud and abuse (http://www.acfe.com/resources/view.asp?ArticleID=9), and must take additional steps to protect yourself. So, moving to a cash (or same as cash) system may seem unwise, because these are inherently riskier forms of payment (http://www.afponline.org/pub/pdf/2008PaymentsFraudandContolSurvey.pdf).

As someone who works for a prepaid business card company, I know that prepaid cards can help bridge the gap between controlling payments and a cash based system. Here's how it works: in advance of purchases you load the card with funds. In the PEX Card system, you can decide what merchant categories are allowed, how much is on the card, as well as a daily spending limit. You can also cancel or block card usage at any time. The PEX Visa Prepaid Card can be used wherever Visa debit cards are accepted, so making purchases is convenient. When purchases are made, you can see them posted in real time. Additional features to keep your company safe from fraud and abuse, include separation of company funds and card funds, ability to remove excess funds from cards, as well as no access to cash advances or ATMs.

If you do use an actual cash or check model, you need to set up regular controls and audits to ensure that your system is the least susceptible to fraud as possible. We suggest hiring a certified fraud examiner to audit your current process and suggest places for improvement or additional control mechanisms. We also suggest that payment paths are separated, so that one person is not responsible for everything from request to payment. And lastly, when employees go on vacation, be sure to review their work - especially those in financial positions. If someone refuses to go on vacation - insist they do. It is often the people who seem to be the most dedicated that are your biggest threat.

Click here if you'd like to see a demo of the PEX Card administrative interface.

Labels: Budgeting, Expense Fraud, Finance Tips

We've talked a lot about cutting expenses over the last few months. Here are just a few of our cost cutting tips:

Ask for discounts
Speak with your vendors and suppliers about early payment discounts. Normally, businesses offer 2-5% for early payments. It may seem paltry, but they add up. Also, you probably belong to one or two small business organizations or associations. Many of these offer discounts for all sorts of goods and services to their members. This, too, can help rein in your costs.

Turn it off
If you're not using your copier, computer, or light overnight - turn them off. A 100 watt light bulb costs about 10 cents per night to leave on, or about $30 per year. Multiply that by all the lights in your office, and you have some real savings.
Check out this article for more details: http://www.aps.com/main/_files/services/BusWaysToSave/OfficeEquipment.pdf

Control spending
Be sure that your employees have a clear and enforceable policy regarding how they spend company funds. Whether for T&E or purchasing - everyone should know their limits. Education and communication are the key to controlling employee spending.

Headcount
You need to think about your head count and potential layoffs. When considering who to keep and who to say goodbye to - don't just look at how much they make. You need to take a holistic approach when evaluating cutting staff. Use a grading system which quantifies an employee's qualities and ensures that you're not playing favorites or cutting your most important workers. Some of the grading categories I suggest are: past performance, total compensation and benefits, contribution to company morale, and will it be possible to have someone else take over their duties.

Here's an interesting article on some legal / EOE issues to consider when downsizing, that may also play a part in your decision: http://www.bizjournals.com/charlotte/stories/2008/11/10/smallb8.html?b=1226293200%5E1728592&brthrs=1

These are some of our past blog posts about cutting costs:
http://www.pexcard.com/blog/2008/10/there-are-some-advantages-to-credit.html
http://www.pexcard.com/blog/2008/12/reduce-administrative-overhead.html
http://www.pexcard.com/blog/2008/12/5-effective-cost-cutting-tips.html
http://www.pexcard.com/blog/2008/10/5-ways-to-save-your-business-money.html

The financial crisis has many of us taking a long hard look at how we conduct business. We're looking for ways to cut costs, conserve cash and credit, and still run a profitable business.

Over the next few installments we'll discuss the financial crisis and ways you can strengthen your business. If you have comments, suggestions, or just want to add your two cents, please feel free to chime in.

If you haven't already seen this article by Michael Lewis (author of Liar's Poker) on how we got here, it's definitely worth a read.
http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom?page=0

Labels: Budgeting, Cash Flow, Finance Tips