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Editor’s Note: This is the third installment of a four-part series that will explore 80 ways to reduce operating expenses. In these difficult economic times, these ways could be the difference between having a profitable year and one of significant financial loss. After all, every dollar of reduced operating expense goes straight to the bottom line of an annual profit-and-loss statement. Take these suggestions at face value, or modify them for your agency. Either way, please take a look. Shaving a few dollars here and there might just save a job.
Although contracts are meant to lock you into a fair market price for a service, they can also have the opposite effect if no one is minding them. For example, prices may balloon while the services provided become sub-standard or non-existent. Although it may make sense to approve the same contract year after year, take a closer look before signing on the dotted line. Don’t assume the price is fair or the promises in the contract will come to fruition. Here are 20 strategies to reduce the cost of contractual services and some of their ancillary costs:
1. Analyze insurance. Review the existing insurance policy and determine whether it “over-covers” current needs. When was the last time the policy was updated? Can you secure a “best-fit” policy with another provider for a lower fee or reduced deductible? Would a higher deductible be a better option? This strategy can be an incentive for management to annually review and update insurance coverage.
One word of caution: Some professionals may become overwhelmed or not allocate enough time to fully investigate the true needs and comparable insurance options, or worse, drop necessary coverage.
