Cash & Liquidity ManagementCash ManagementCash Management RegionalFirms Failing to put Cost Management Strategy into Practice

Firms Failing to put Cost Management Strategy into Practice

A survey of UK companies found that 70% have no cost management strategy in place, despite more than eight in 10 having cost management on their boardroom agenda.

The survey, conducted by
Management Today
magazine on behalf of cost management consultancy Auditel, canvassed views from over 120 business leaders. Two out of three respondents agreed that cost management can accelerate performance, improve efficiency and gain competitive advantage for their organisation.

Almost half of the respondents considered efficiency improvements and effectiveness to be the point of cost management measures. Nearly one in four viewed them as a means to simply ensuring financial survival. However, one in three considered cost management measures in more positive terms, stating that for them, the main purpose is to accelerate performance or gain a competitive advantage over their rivals.

Travel, transport and logistics have been the most common areas of focus for previous cost management efforts, followed by human resources – an area of concentration for half of the survey respondents. Telecoms, both fixed and mobile, are the next most likely area to come under cost management scrutiny.

However, managing the cost of human resources was cited by survey respondents as the biggest challenge facing their organisations. Property and premises costs were close behind, with travel, transport, logistics and IT infrastructure also considered significant cost management challenges.

Lack of understanding was found to be the greatest single obstacle to cost management being implemented. The survey also found that chief executives (CEOs) were regarded as the principal champions of cost management exercises by 60% of respondents, while 40% named financial directors.

Cost management measures were undertaken in-house by 73% of the companies surveyed.

Auditel commented that companies which are positive about cost management and see it as more than simply making savings are the ones that will be in pole position to take advantage of economic recovery.

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