ERA Procurement Solutions' director, Martin Wiesenhaan, believes a holistic approach to reviewing motor vehicle leasing costs is the key to a consolidated and accountable corporate policy that delivers long term savings. He therefore not only analyses the leasing situation but also assesses the fuel, maintenance and insurance costs and processes in order to ensure that the entire category benefits.
Martin explains more, “We recently assisted a client whose fast expansion had resulted in their car leasing costs amounting to around $5million for their requirements. They believed there were opportunities for consolidation and so were receptive to ERA’s
approach."
“We identified that there were nine suppliers which meant it was hard for the client to monitor the number of actual car leases currently in place and of course there were
inconsistencies."
The first step Martin took was to collect, from each of the company’s subsidiaries, the information and analyse how much was being spent on car leasing, which suppliers were being used and what contracts were in place, as well as how many and how relevant the leases were in terms of actual requirement and age of lease.
The next step was to implement a new standard corporate policy whereby a preferred manufacturer and lease supplier were chosen and secured. Though budgets per se were not set, maximum allowances were implemented as appropriate. Each step was presented to the client and the manufacturer and supplier chosen based on the best fit for their current needs and the associated benefits.
By standardising the client’s manufacturer - in this case it was General Motors - ERA was able to achieve a further discount on the purchase price for the client and also able to regulate the quote requirements and take advantage of their maintenance program.
Martin also added, “We’ve negotiated with the supplier for further discounts based on the client’s sheer buying
power."
Then ERA was able to look at how fuel was purchased and again several fuel card providers were being used. One fuel card was then selected for the entire company to optimise on their buying power and to secure a more beneficial price point.
The final step was to centralise the insurance. “Insurance is often organised through the leasing company but if you arrange a corporate policy further savings can be achieved which is what we managed in this
instance," adds Martin.
The savings achieved to date are $75,000 with further impact to be felt as the leasing contracts come up for renewal and are turned over to the new corporate policy arrangement.
Martin concludes, “For the client the greatest long term benefit has been that they now have a streamlined corporate policy in place which is monitored online using the supplier’s centralized management reporting system. This incorporates per individual a driver budget analysis comparing a particular period against the life to date from a budget and expenditure perspective as well as a monthly driver report which incorporates a cost breakdown for the lease, maintenance, repairs and fuel as well as a fuel consumption report and FBT
information."
"ERA, as part of its service policy, has handled the implementation to ensure that the client’s expectations are being
met."
“It was good to know that at all times ERA was representing our best interests no matter which supplier they were negotiating with and because of this they were able to drive the deal that much
harder," says Alan Fonseco, CFO Alesco.
“The major benefit of the project was the cost savings realised, the simplification as well as the standardisation of our processes on a very large motor vehicle
fleet."
In all, the ERA team was able to secure annual savings of $600,000 for Alesco.
“These savings, achieved by ERA, far exceeded our
expectations," adds Alan Fonseco.
Expense Reduction Analysts - Working in partnership with our clients to maximise profits.
Profit and performance used to be the be all and end all of business. Do well and you’d look great. But now, accountability has become king. If you’re to be taken seriously in the corporate world, your company has to look great by the book, and prove they’re a ‘best
practice' organisation.
This isn’t as easy as it used to be, thanks to the high-profile corporate collapses around the world over the last couple of years. Suddenly, corporate governance is top-of-mind.
In
the US, the
Sarbanes-Oxley Act now requires public companies to validate the
accuracy and integrity of their financial management. And the Act
has ramifications here for affiliates of US companies, or your business
wants to trade with one or supply it with components. It’s now
not enough to regularly audit your company: you’ve got to rigorously
double-check the checkers.
That’s where cost management consultants Expense Reduction Analysts (ERA) comes to the rescue. With its Accounts Payable Recovery Audit, companies get a complete review of all their systems, including past accounts and procurement transactions to ensure that suppliers, and even customers, are conforming to their trading terms and conditions.
ERA discovers and highlights overcharging, double billing, under-claimed rebates, tax credits and allowances, contract printing errors, suppliers rebate errors, settlement discounts and non-claimed penalties.
But the best thing is that ERA offers a ‘no reclaims, no
fee' service: if they don’t find any savings, the client doesn’t pay, but they will still have had an audit of their systems. So companies save money whether any glitches are found, or not, as they don’t have to dedicate any of their own resources to the mammoth task.
ERA does all the work: analysing data, isolating and verifying errors, preparing back-up paperwork, contacting suppliers and recovering funds. And it’s the business that reaps the reward of extra profit as over-payments are recovered and information is gleaned on contract compliance. But the best thing is that a company gets an independent health check on its systems and a clean supplier file.
“It’s about appropriating and sustaining a company’s
wealth,' says Keith Ketheeswaran, managing associate with ERA. “Firstly we assess independently whether value is being created. We look at how the company can create value. Then we execute the initiatives, and lastly monitor how they’re sustaining
them."
ERA’s Accounts Payable Recovery Audit stands head and shoulders over similar-minded products touted by other expense reduction companies.
“Everybody seems to be focusing on the core areas of
business,' says Keith, “But we delve into non-core areas, such as communication and logistics. We also bring to the organisation the expertise that wouldn’t be economically viable to have within the company. Then we stick around to implement and monitor the recommendations, and educate staff as to how the changes will make a difference in the long
term."
He says companies that have embarked on their own self-analysis of the non-core areas of their business usually focus on what they’ve done in the past, and how this stacks up with what they’re doing now. Or they may try to gauge how they rate against their competitors. The question is: how confident are they of their internal procedures? Have they safeguarded themselves against potential fraud?
“What we do is independently measure them against other organisations of similar size and structure, which may be in completely different sectors. We take a base-line approach, validate the accuracy of their financial management, and stay with the organisation to monitor supply and
performance."
As a result, ERA unlocks value in areas of companies that are traditionally non-productive and cost-adding. “We look at areas such as phone bills, printing, office supplies and cleaning contracts as potentially
profit-adding," adds Keith. “It’s all about accountability and finding ways to get
24-cylinder performance from all aspects of a company’s
business." This is definitely something to get revved up about!
Expense Reduction Analysts - Working in partnership with our clients to maximise profits.
