Every organization desires to reap in maximum profits from the business and run it with efficient and optimum utilization of resources. Success or failure of a business is attributed not only to the revenue generated but also by management of that revenue. Cost Management is a concern and a prerogative of every CFO in an institution. Be it in good or bad times, effective management of costs leads to escalate the organization profits and at the same time sustain during difficult times. All organizations strive to put the right processes and strategies in place to generate maximum benefit from available resources. Finding new avenues to boost sales and ways to slash costs are on the business objectives at all times. So, what are the ways to reduce cost? Based on working and understanding different organizations, every company irrespective of their size needs to adopt the three key aspects to lessen their costs and increase efficiency. The” ACE strategy”, as we call it would be an approach of Automation, Consolidation and Elimination. Look for Processes or activities which can be automated. This reduces the time taken to perform, manpower cost and manual errors leading to re-work. Consolidation is an integral part of the strategy as it reduces duplication of work and aggregates activities/resources with similar tasks thus reducing the cost and time. Try and eliminate all the activities that prove to be adding least or no value to the company. The organization should always spend on value adding or revenue generating activities/resources. These three aspects of management encompass a large portion of efficient cost control. Understanding the dynamics of the business and adopting simple ways to manage current commitments as well as prepare for future contingencies is what every organization should be well equipped with. Targeting the top line with constant vigilance on the bottom line should be the focus of every organization.
Pratibha Sharma
Senior Assistant Consultant – Finance and Strategy