I have been reading with interest about the cost reduction and cost cutting role of the Finance Director. It is no surprise that companies are tightening their belts in the current economic climate; even the HMRC has the challenge of achieving a whopping £1.6bn reduction in costs by 2015 while improving service quality! This can offer some explanations to its recent adoption of iXBRL, which not only allows the HMRC to make significant savings in its processing costs but also allows it to improve its risk assessment quality.
One of the articles that really caught my attention was the cost boomerang piece on financialdirector.co.uk. I find it interesting that a lot of CFOs and Finance Directors believe that only 5% of cost savings made during the recession can be sustained in the long term. Obviously as the economy picks up and people regain their confidence to spend, the company automatically sees an increase in cost as it invests more in staff and resources to cater for the rise in demand. However, I believe there are some cost savings yet to be made, possibly even within the accounts department itself.
Take iXBRL for example, at Arkk Solutions we have been contacted by many FTSE250 companies whose first point of call for their iXBRL conversion needs were accountancy firms and software providers they have used in the past. Unsurprisingly, over 95% of these companies went on to choose us over these providers once they realised we could offer them the same level of service (and in some cases, even better service) at on average 50% cheaper.
Why are we able to do this? Well, we specialise in one thing – iXBRL conversions, and our expertise means we’re not spread thinly and can get things done faster. This in turn results in significant cost savings which gets passed on to our customers. Whilst we’re not the cheapest iXBRL provider out there, our prices are very competitive for the high quality of service we offer as standard.
I wonder if a whole range of cost savings can be made across the business by simply switching providers where the only difference is price. There are many niche businesses out there who like Arkk Solutions are very good at what they do and can offer better service at a more "reasonable” price tag. To me, this makes perfect sense and it seems our customers think so too.
So what do you think? How has your company made cost savings during the recession? Do you think these savings can be maintained in the long term? I'll like to hear from you, please leave your comments below.
