Executive Focus can help manage your Operating Expenses.
I have noticed this year that many of my clients gross profit %’s are on track to last year and budget, but there appears to be a disconnect with some companies in regards to some higher operating expenses. Of notable mention, it appears credit card fees and freight expense are on the rise for many businesses.
Your sales may be strong, but have your cash sales been dropping? Accepting credit cards is crucial for a business to be successful, but credit card fees are among the fastest growing costs of doing business and can erode profits. Each credit card merchant provider has different credit card processing fees that can range from 1.15%-3.25%. These fees are based upon different types of methods such a flat rate fee or interchange plus fee. In addition, there can be monthly or one time fees. Research is the key in deciding the right merchant. Another option is to pass on the credit card fees to the customer with a credit card surcharge. This is allowed in 42 states provided you comply with the rules set by the card brand.
It is a Trucker’s market in 2018. Freight costs are rising and pushing down profits. High demand, low supply of drivers, bad weather including last year’s hurricanes, and climbing diesel prices (up 18% through Q1 2018) are the culprits. In addition, on December 18, 2017 the electronic logging devices (ELD) mandate was implemented which tightened the market even further. If you can’t pass on increased freight expenses to your customers, it’s important you have a plan in place with multiple shipping options available so you can quickly react to price increases. It is also, imperative that your supply chain strategy is flexible and not a static policy. Lastly, have you thought about taking advantage of any of the latest logistic technology?
CDH’s Executive Focus is an excellent solution for helping your business manage and monitor your operating expenses. Executive Focus is a visualization tool that provides transparency within the organization and empowers people with knowledge by helping them have a better understanding of all departments within the business. How do we do this?
- We develop a custom set of business metrics that represent your organization’s function as a whole.
- We focus on Key Performance Indicators (KPI’s) that clearly reflect efficiencies and value add capabilities.
- We facilitate monthly management team meetings to highlight and discuss the trends and relationships in your results to drive a culture of continuous improvement.
Matt Wirth is a Senior Consulting Manager for CDH, a national accounting and consulting firm. He has been consulting with privately held companies for over twenty years. CDH provides a service called Executive Focus. This service offers a process, tools and support to help management teams improve their performance. They design custom graphics packages which identify trends, relationships and performance drivers. The net effect is a system that fosters continuous improvement and enhances the bottom line. Matt has a BBA in accounting from the University of Milwaukee and is a CPA.
If you would like to learn more about the CDH Executive Focus process please contact Matt Wirth, Senior Manager ([email protected] or 262-784-4040).