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Sensible Ways to Cut Overhead

Posted By Administration, Monday, March 6, 2017

I recently  received a link to a free ebook by PSMJ Resources on Financial Management.  I was skimming it and came to their discussion on overhead and the “11 Ways to Cut Overhead”. I was outraged by #9, Shift job-cost reporting, billing, and other accounting functions to the secretary who does it as a part-time, collateral duty.  In the name of all good design firm bookkeepers everywhere I would have thrown something right across the nexus in response, and it wouldn’t have been flattering. It’s right up there with their last Top Ten Overhead Cost Cutting List a couple of years ago when they said “Fire all of the Administrators.”

Their first two ways extolled the cost saving approaching of making printing a profit center.  (See list below)  If anyone still thinks that in this all electronic document/no printing 21st century world, printing is still a line item that drives overhead rates, I’m not sure where they’re working.

Another of their other dubious methods included: “5. Discontinue in-house lunches;”  when, according to a survey by Peapod, companies that provide free food have happier employees compared with those who don’t get to chow down on their employer’s dime, and forward-thinking companies know that collaboration during non-paid lunches is a free hour of work for the firm.

So  – partially tongue-in-cheek (but grounded in truth) – I came up with my own List of Top Ways to Cut Overhead:

8 Ways to Cut Overhead:

  1. Make sure the Owner has two credit cards – personal and business – and stops charging personal items on the business account.
  2. Limit each principal to 1 golf tournament a season.
  3. Eliminate big sporting events, deep-sea fishing excursions, season tickets to the neighborhood team, and kill the box at the alma mater university stadium.
  4. Lower recruiting costs by requiring each professional to join a local professional organization, network, and find the good other professionals in the community by working with them
  5. Do payroll in-house; eliminate the cost of the payroll service; have a fractional CFO to review quarterly statements instead.
  6. Make job-cost reporting and billing a full-time position with an experienced person who can maximize revenue and cash-flow
  7. Hire adequate administrative staff to take the burden off of the professionals so they have more billable hours. Push tasks down to the lowest cost level not up to the highest.
  8. Forget about losing sleep over printing, or other ancillary charges in today’s non-print, cheap communications world. Keep people focused on the project delivery.

Do you have others?  Post them in the comments below and I'll  compile them all for a state-of-the-art article on cutting overhead in SDA Today.

Here's the full listing from PSMJ Resources:

  1. Require all project-related printing to be done outside the firm so vendor invoices can be passed on to clients as reimbursable expenses.
  2. Charge all plots to the client; no free in-house plots.
  3. Eliminate company cars.
  4. Charge computer purchases requested by an individual to his department or to the specific job for which it was requested.
  5. Discontinue in-house lunches.
  6. Limit company-paid professional registrations to one per person per year.
  7. Limit company-paid membership in national organizations to one per person per year.
  8. Eliminate your in-house bookkeeper; use outside service vendors for your payroll.
  9. Shift job-cost reporting, billing, and other accounting functions to the secretary who does it as a part-time, collateral duty.
  10. Use students as part-time employees for deliveries, routine filing, posting of invoices, and other clerical tasks. 

 

 

Deborah Gill, CPA, CGMA, CDFA is the Chief Financial Officer at Precision Measurements, Inc. (PMI), a 50+ person land-surveying firm located in Virginia Beach, VA.  Before joining PMI, Deborah was the Director of Business Operations at Clark Nexsen, PC, a 550 person multi-disciplined architecture, engineering, planning, and interior design firm located in VA, NC, GA, and DC. 

Tags:  Accounting  Cost Cutting  Design Administration  Finance  Overhead  Profits 

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Permalink | Comments (5)
 

Comments on this post...

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Betsy Nickless, FSDA says...
Posted Tuesday, March 7, 2017
Thank you!! Used to give PSMJ tons of cred, but not so much any more.
Permalink to this Comment }

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Sarah Wallace, FSDA, LEED Green Associate says...
Posted Friday, March 10, 2017
1 way to cut overhead is to pay for and SDA membership - there are a plethora of testimonials from members detailing how an SDA program or the SDA network resulted in a direct cost savings to the firm. Not only do the majority of our educational programs directly deal with business practice principals that can have real impact on the firm's bottom line (like setting ideal billing rates, project management efficiency, etc.), but the network creates the opportunity to provide immediate access to knowledge base that lets administrators maximize their billable time. I learned about the retraining tax credit through SDA network that has resulted in over $10,000 tax deductions for the firm principals each year for 3 years now.

Reviewing 401K vendor fee agreements periodically can also result in tremendous reduction in overhead costs for employer provided aspects of the plan.
Permalink to this Comment }

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Monica Hodges, CDFA says...
Posted Monday, March 13, 2017
So true. The information I have brought back to my principal on ESOP has proven to be very valuable. As well as, group training on software like Bluebeam during EDConnect and Professional Insurance
Permalink to this Comment }

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Monica Hodges, CDFA says...
Posted Monday, March 13, 2017
So true. The information I have brought back to my principal on ESOP has proven to be very valuable. As well as, group training on software like Bluebeam during EDConnect and Professional Insurance
Permalink to this Comment }

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Kimberly Eastman says...
Posted Monday, July 17, 2017
I agree! I have had to prove my value over and over. AND have been able to do so by tracking time and resource waste (ie-PMs time is not well spent on typing a transmittal or filling out the FedEx form.) . I like PSMJ for much of the information they do put out is quite useful. That said, I hate to say it, but they bombed on this one. I thought that when I originally flipped through the material myself. It is good to know someone else out there thought the same.
Permalink to this Comment }

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