Strategic Cost Management

Integrated models often treat COGS as one line. But the problem with doing this is it doesn't isolate volume from cost. This model does it differently. 𝗩𝗼𝗹𝘂𝗺𝗲 𝗮𝗻𝗱 𝗰𝗼𝘀𝘁 𝘂𝘀𝘂𝗮𝗹𝗹𝘆 𝗺𝗼𝘃𝗲 𝗳𝗼𝗿 𝘂𝗻𝗿𝗲𝗹𝗮𝘁𝗲𝗱 𝗿𝗲𝗮𝘀𝗼𝗻𝘀: 1. Costs go up ≠ manufacture less 2. Costs go down ≠ manufacture more Units manufactured may be driven by demand, seasonality, capacity, stock-ups or stock-outs. The connections are completely different than what you'd see in revenue, where price can impact volume. In this model, COGS = volume x unit cost, tracked separately. If you blend them into a single line, you lose the story that unit costs per case are increasing. It's shown in each of the three product line forecasts. But you'll also note that I've omitted volume from this forecast. Those figures are captured on an assumptions page. Why did I build that way? The purpose of this view is to show cost risk, not sales risk. The person who's reviewing wants to know whether costs moved and by how much. Volume swings are a different discussion, and one that I'm saying belongs with revenue, not manufacturing volume. 𝗪𝗵𝗮𝘁 𝗶𝘀 𝗵𝗮𝗽𝗽𝗲𝗻𝗶𝗻𝗴 𝘄𝗶𝘁𝗵 𝗼𝗽𝗲𝗿𝗮𝘁𝗶𝗻𝗴 𝗲𝘅𝗽𝗲𝗻𝘀𝗲𝘀? I forecast payroll and benefits across four teams: (a) Sales and account management (b) Marketing (c) Operations and supply chain (d) Other G&A None of these are tied to unit cost. They're tied to headcount, meaning how many people work on each team. That's why I call them out separately. Other costs, like sales commissions, freight, and marketing, are forecast as a percent of revenue. Why? Because when the company sells more, we expect to pay more for those things too. More sales means more commission, more shipping, and more marketing spend. Other G&A stays fixed. It doesn't move with sales. In FP&A, at mid-size and large companies, we're usually not building full 3-statement models. Our job is building operating forecasts. Ones that show what's really driving the business, today and long-term. 📩 I share tips, tools, and lessons from 20+ years in FP&A, consulting, and turnaround work every week in The Statement Newsletter. Subscribe here: https://lnkd.in/gtGB4uKn

Everyone wants to install solar panels. Because renewable energy is the fad now. I get it. But if we do not address the energy being wasted first, then the solar plant itself has to be designed to supply even that wasted energy. That means: Higher solar capacity. Higher inverter capacity. Higher project CAPEX. So before asking: “How much solar should I install?” The first question should be: “Where am I wasting energy?” Fix the wastage first. Then install solar. A leaking pot cannot be filled efficiently. An inefficient factory cannot become sustainable simply by adding solar panels. In many industries, we still find: • Steam leakages • Uninsulated hot & cold surfaces • Improper chiller operation • Compressed air leakages • Poor combustion efficiency • Low power factor • Oversized or underloaded motors • Waste heat rejection Adding renewable energy without fixing these losses is like pouring water into a cracked pot. That is why energy audits matter. A proper energy audit identifies: ✔ Where energy is wasted ✔ Which losses matter most ✔ What should be fixed first ✔ Where ROI is highest ✔ How to reduce future CAPEX The cheapest unit of energy is the one you never consume. Energy efficiency first. Generation second. Indian Institute of Technology, Ropar | Center of Research for Energy Efficiency and Decarbonization (CREED) | Kotak - IIT Madras Save Energy Mission (KISEM) | KISEM IITRPR | Karthick M | Renjith Raj R #EnergyAudit #EnergyEfficiency #Decarbonization #Sustainability #NetZero #IndustrialEnergy #MSME #EnergyManagement #SolarEnergy #IITRopar

Basic FP&A versus Strategic FP&A FP&A can and should be more than covering the basics. Let’s jump in: ⤵️ 📌 Basic FP&A: ➣ Consolidate Data You download data from various systems, like Netsuite for actuals, or Salesforce for sales. Then you clean it up so everything aligns and can be consolidated in Excel. ➣ Update Spreadsheets You manage large Excel files where you get data from different sources to create graphs for your PowerPoint deck. ➣ Adjust Budgets You collect inputs from the department heads. Then you plug it into your spreadsheet to reflect the latest estimates. ➣ Compare Budgets to Actuals You update a report with last month's budgets in one column and copy / paste actuals into the next column. Then you email it to the department heads, asking for explanations. ➣ Update Standard Reports in PowerPoint Once all the Excel reports are done, you need to update the deck that gets reviewed by the senior leaders. Worst case, that means copy/pasting from Excel to PowerPoint. 📌 Strategic FP&A: ➣ Recommend new metrics You find leading indicators that tell you where the business will likely go. If the impact is significant, you improve your forecast accuracy and include the metrics in the management reporting deck. ➣ Get results sooner You identify bottlenecks in the month-end close process and experiment with different ways to remove them. Now you can present results earlier, which gives more time for deep analysis. ➣ Test a new forecasting method You experiment with driver-based planning and realize that combining several forecasting techniques improves accuracy. As a result, your forecast becomes a better tool for making decisions. ➣ Identify risks and opportunities You work closely with your business partners to find the root causes of the forecast variances. Then, you make recommendations about capitalizing on the opportunities or mitigating the risks. ➣ Implement Scenario Planning You take your driver-based forecasting to the next level by identifying best-case and worst-case scenarios. Then, you recommend what the company should do in each scenario. ➣ Identify cost savings You combine your business understanding and business partnering skills with your analytical abilities and determine which costs have low returns. Then, you suggest where to reinvest the savings. The bottom line is this: Strategic FP&A doesn’t just have a more significant impact on the business. It’s also more enjoyable. To do more strategic FP&A, you need to: #1 Automate the basics #2 Develop a broad understanding of the business #3 Become an effective Finance Business Partner So, let me ask you this: ❓Do you do basic or strategic FP&A tasks? ❓ What did you do to spend less time on basic tasks? 💎 Comment below to help others. P.S.: I share FP&A best practices every Tuesday with my audience of 17,000+ finance and accounting professionals who subscribe to my newsletter. You can get it here (free): https://lnkd.in/eGgS9hYs

Most energy auditors show up with a clipboard and a utility bill. The best ones show up with a full toolkit. Here's what a rigorous ASHRAE-level audit actually looks like on the ground: Level 1 is a walkthrough. You're benchmarking energy use intensity, spotting obvious waste, and flagging low-cost fixes. Useful. But limited. Level 2 goes deeper. Every system gets scrutinized. That's where the real tools come in. Level 3 is investment-grade. The data has to be sufficiently defensible to support a guaranteed savings contract. So what does the toolkit actually look like? → IR thermal cameras catch envelope failures, insulation gaps, and electrical hot spots invisible to the naked eye → Thermo-hygrometers log temperature and humidity across zones, exposing where comfort and efficiency break down → Velometers and anemometers measure air velocity at grilles and ductwork, revealing overtaxed HVAC systems → BTU meters measure actual thermal loads through HVAC systems, replacing guesswork with real data → Blower doors quantify air leakage through the building envelope, the invisible loss that drives up cooling loads fast → Light meters confirm whether lighting levels match actual need, not a design from 20 years ago → CO2 and air quality sensors expose ventilation inefficiencies hiding behind acceptable-looking controls → Flue gas analyzers assess boiler and furnace efficiency, flagging incomplete combustion and excess heat loss → Laser distance measurers capture accurate floor areas and volumes fast, feeding directly into EUI calculations → Temperature data loggers track gases, liquids, and surfaces over time, catching patterns a single reading will always miss → Real-time IAQ monitors track temperature, humidity, CO2, VOCs, and particulates continuously, not just at inspection → Power quality analyzers assess harmonics and power factor, uncovering inefficiencies that never show on an energy bill → Power loggers track electrical load and demand over time, building the load profile you need for accurate retrofit sizing → Panel-mounted energy sensors show exactly which circuits draw power, when, and how much → Ultrasonic flow meters measure liquid flow through pipelines non-invasively, critical for chilled and hot water loops In the GCC, this matters more than in most places. Cooling loads here are the focus. Generic audit approaches miss local context. A thermal camera in Abu Dhabi tells a different story than one in Amsterdam. The gap I keep seeing: audits that use half the toolkit and wonder why retrofit decisions stall. You can't build a business case on a site visit and a spreadsheet. The data quality of your audit determines the quality of every retrofit decision that follows. What tools are you seeing used on site in this region? Curious what's standard practice versus what's still rare. Follow The Regenerative Brief for more energy savings gems. ♻️ Repost if you learned something.

Nonprofits aren’t as efficient as they think and it’s costing them big. Nonprofits waste 10–15% of their budgets on inefficiencies, but 60% have never conducted an operational audit. Why? Because many nonprofits equate “lean budgets” with “lean operations.” That’s not how it works. A quick example: Let’s say a nonprofit team spends 2 hours every week manually logging donor data into a spreadsheet. That’s 8 hours/month. Over a year, that’s 96 hours, gone. Now imagine there are 5 processes like this happening across the organization. That’s hundreds of hours (and thousands of dollars) being wasted on tasks that could be automated or streamlined. The solution? A simple time and motion study. It’s not fancy, but it works. Here’s how to do it: 1. Pick one week to track workflows. 2. Ask every team member to record: What they’re working on. How long each task takes. Any bottlenecks or repetitive steps they notice. 3. Identify at least one redundant process to eliminate or improve. Nonprofits are built to maximize impact, not waste resources. And yet, inefficiencies often go unnoticed because no one’s looking for them. But here’s the kicker: Every dollar saved on operations is a dollar that can go toward your mission. Want to get started? Audit your workflows this week. Identify one task to streamline. Free up time and money for what really matters: your cause. Efficiency isn’t just for startups. Nonprofits need it too. With purpose and impact, Mario

𝗠𝗼𝘀𝘁 𝗯𝘂𝘀𝗶𝗻𝗲𝘀𝘀𝗲𝘀 𝗮𝗿𝗲 𝗹𝗲𝗮𝗸𝗶𝗻𝗴 𝗽𝗿𝗼𝗳𝗶𝘁 𝗶𝗻 𝘁𝗵𝗲𝘀𝗲 𝟱 𝗽𝗹𝗮𝗰𝗲𝘀. After auditing over 200 businesses, I see the same patterns everywhere. Smart business owners making good revenue but wondering where all the profit goes. The leaks are always in the same 5 places: **Leak #1: Death by a Thousand Scope Creeps** "Can you just add one more thing?" "This will only take 5 minutes." "While you're at it, could you also..." Those "little extras" are killing your profit. I had a web designer who was doing an average of 8 hours of free work per project. 8 hours x $150/hour x 24 projects annually = $28,800 in free labour. The fix: Clear scope documents with change request fees. Result: $25K additional profit the first year. **Leak #2: The Tool Tax** Multiple subscriptions for tools that do the same thing. Software that doesn't integrate, creating double work. "Premium" features you never use but pay for anyway. Average business I audit: $3,200 annually in redundant software costs. Plus 6 hours weekly in manual work because systems don't talk to each other. The fix: Tool audit and integration. Average saving: $15K annually (cost + time). **Leak #3: The Pricing Lag** You raised your prices 2 years ago. Your costs have increased. Your skills have improved. Your results are better. But your prices stayed the same. Inflation alone means you're earning 8% less than you were 2 years ago. The fix: Annual pricing review with cost-of-living adjustments minimum. Average increase when implemented: $12K annually. **Leak #4: The Efficiency Drain** Doing $20/hour work when you charge $200/hour. Scheduling your own appointments. Writing your own invoices. Posting your own social media. I worked with a consultant spending 12 hours weekly on admin work. 12 hours x $300/hour x 50 weeks = $180K worth of her time annually. Hired a VA for $25/hour to handle it all. Cost: $15K annually. Saving: $165K worth of time to focus on revenue-generating activities. **Leak #5: The Opportunity Blind Spot** Saying yes to $5K projects when you could be doing $25K projects. Working with difficult clients because you're afraid to fire them. Not raising minimums because you think you'll lose clients. (Spoiler: You lose the wrong clients and attract the right ones.) I had a client doing 40 small projects annually at $3K each. We raised his minimum to $8K and improved his positioning. Result: 20 projects annually at $8K each. Same revenue, half the work, better clients. Most business owners find $10K+ in profit leaks within the first hour. Want me to help you find yours? I'm running "Find 10K of Hidden Profit in 60 Minutes" this month. We'll go through your actual business and plug the leaks that are costing you money right now. DM me the word 'Profit' for all the info. Because the profit is already there. You just need to stop it from leaking out. -Holly #Workshop #Profit #Businessowner #leader #Leadership

🤔 𝐄𝐯𝐞𝐫 𝐰𝐨𝐧𝐝𝐞𝐫𝐞𝐝 𝐰𝐡𝐲 𝐞𝐯𝐞𝐧 𝐛𝐢𝐠 𝐜𝐨𝐦𝐩𝐚𝐧𝐢𝐞𝐬 𝐥𝐨𝐬𝐞 𝐜𝐫𝐨𝐫𝐞𝐬 𝐬𝐢𝐥𝐞𝐧𝐭𝐥𝐲, 𝐰𝐢𝐭𝐡𝐨𝐮𝐭 𝐚𝐧𝐲𝐨𝐧𝐞 𝐧𝐨𝐭𝐢𝐜𝐢𝐧𝐠? In my experience as a cost auditor, it usually comes down to a few recurring red flags. Here are the top 5 issues I see during audits: 1️⃣ 𝐌𝐢𝐬𝐦𝐚𝐭𝐜𝐡 𝐢𝐧 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧 & 𝐂𝐨𝐧𝐬𝐮𝐦𝐩𝐭𝐢𝐨𝐧 – Raw material usage not matching actual output or energy consumption. Even small gaps can indicate hidden inefficiency or wastage. 2️⃣ 𝐀𝐛𝐧𝐨𝐫𝐦𝐚𝐥 𝐂𝐨𝐬𝐭 𝐕𝐚𝐫𝐢𝐚𝐧𝐜𝐞𝐬 – Sudden jumps in cost per unit often point to untracked expenses or incorrect allocations. 3️⃣ 𝐖𝐫𝐨𝐧𝐠 𝐂𝐨𝐬𝐭 𝐀𝐥𝐥𝐨𝐜𝐚𝐭𝐢𝐨𝐧 – Overheads split randomly instead of following standards distort profitability. 4️⃣ 𝐌𝐢𝐬𝐬𝐢𝐧𝐠 𝐃𝐨𝐜𝐮𝐦𝐞𝐧𝐭𝐬 – GRNs, job cards, or invoices not properly maintained cause audit delays and risks of disallowance. 5️⃣ 𝐎𝐥𝐝 𝐨𝐫 𝐔𝐧𝐫𝐞𝐜𝐨𝐧𝐜𝐢𝐥𝐞𝐝 𝐁𝐚𝐥𝐚𝐧𝐜𝐞𝐬 – Pending WIP or advances left year after year block cash flow and create discrepancies. 💡 Practical Fixes: Reconcile cost sheets monthly. Maintain supporting documents diligently. Track and clear old balances regularly. 📌 Fact: Companies that actively manage these areas save 5–10% in overheads and avoid surprises during audits. Cost audits aren’t just compliance — they’re profit-protection tools. #CostAudit #InternalAudit #FinanceTips #BusinessEfficiency #CMAInsights #FinancialDiscipline

𝗜𝗻𝘁𝗲𝗿𝗻𝗮𝗹 𝗔𝘂𝗱𝗶𝘁𝗼𝗿𝘀, 𝘄𝗲 𝗠𝗨𝗦𝗧 𝗶𝗱𝗲𝗻𝘁𝗶𝗳𝘆 𝗖𝗼𝘀𝘁 𝗮𝗻𝗱 𝗧𝗶𝗺𝗲 𝗦𝗮𝘃𝗶𝗻𝗴𝘀 𝗼𝗽𝗽𝗼𝗿𝘁𝘂𝗻𝗶𝘁𝗶𝗲𝘀 𝗶𝗻 𝗼𝘂𝗿 𝗮𝘂𝗱𝗶𝘁𝘀. In Lean and Six Sigma, "waste is any effort that consumes resources but doesn’t add value". Examples we often overlook include; 1.     Endless approval layers for routine expenses 2.     Reports prepared and  generated monthly but never reviewed 3.     Duplicate data entry across HR, Finance, and Operations systems 4.     Over-ordering of materials, leading to excess inventory 5.     Vendor contracts renewed without utilization review 6.     Meeting after meeting without clear outcomes or follow-ups 7.     Manual reconciliations that could be automated 8.     Underutilized software licenses or IT systems 9.     Printing hard copies when digital is sufficient 10. Storage of obsolete inventory with no disposal plan 11. Hiring processes that take months due to bottlenecks 12. Unused office space or facilities incurring overheads 13. Energy wastage from lights, HVAC, and equipment running idle 14. Procurement from high-cost suppliers when alternatives exist 15. And many….. As internal auditors, assurance will always be our foundation. But in today’s environment, our role must go further. We need to highlight opportunities where management can achieve real savings in cost and time. 𝙀𝙫𝙚𝙧𝙮 𝙗𝙤𝙩𝙩𝙡𝙚𝙣𝙚𝙘𝙠 𝙧𝙚𝙢𝙤𝙫𝙚𝙙, 𝙚𝙫𝙚𝙧𝙮 𝙧𝙚𝙙𝙪𝙣𝙙𝙖𝙣𝙘𝙮 𝙘𝙪𝙩, 𝙚𝙫𝙚𝙧𝙮 𝙝𝙤𝙪𝙧 𝙨𝙖𝙫𝙚𝙙 – 𝙞𝙨 𝙫𝙖𝙡𝙪𝙚 𝙘𝙧𝙚𝙖𝙩𝙚𝙙. Internal audit is not just about protecting value… it’s about creating value. 𝗧𝗵𝗲 𝗺𝗼𝘀𝘁 𝗱𝗮𝗻𝗴𝗲𝗿𝗼𝘂𝘀 𝗸𝗶𝗻𝗱 𝗼𝗳 𝘄𝗮𝘀𝘁𝗲 𝗶𝘀 𝘁𝗵𝗲 𝘄𝗮𝘀𝘁𝗲 𝘄𝗲 𝗱𝗼𝗻’𝘁 𝗿𝗲𝗰𝗼𝗴𝗻𝗶𝘇𝗲. – 𝗦𝗵𝗶𝗴𝗲𝗼 𝗦𝗵𝗶𝗻𝗴𝗼

How I reduced our cloud infrastructure costs from $1,660 to $440 per month Last month I completed a cloud cost optimization project that's saving us over $1,200 monthly - that's $13,000+ annually from just one account. The problem was typical for growing companies. Our cloud spending had grown organically as we added features and scaled users. We were paying for resources we didn't need and running inefficient configurations. My approach was systematic: First, I analyzed our actual usage patterns versus provisioned capacity. We had instances running 24/7 that were only needed during business hours. Second, I implemented auto-scaling policies that match resource allocation to real demand. No more paying for idle servers during off-peak times. Third, I optimized our database configurations and moved appropriate workloads to more cost-effective instance types. Fourth, I set up comprehensive monitoring and alerting to prevent cost creep in the future. The results speak for themselves - 70% reduction in server costs across our infrastructure. Next month we're projecting costs will drop to just $200 as the remaining optimizations take effect. But here's what many companies miss: this isn't just about cutting costs. Better resource management also means better performance and reliability. Our applications run faster now because they're properly sized for their workloads. The real lesson is that cloud cost optimization should be ongoing, not a one-time activity. Regular audits and proper monitoring prevent waste before it becomes expensive. How often do you review your cloud infrastructure costs? Most companies are surprised by how much they can save with proper optimization. #CloudOptimization #CostOptimization #AWS #TechnicalLeadership #FinOps

Cost-effectiveness analysis (CEA) is a critical tool for evaluating the efficiency of interventions by comparing costs to achieved outcomes. This document provides a structured approach to applying CEA in impact evaluations, offering insights into costing methodologies, data collection techniques, and interpretation of cost-effectiveness ratios. The guide explores different cost analysis methods, including cost-efficiency, cost-benefit, and cost-effectiveness assessments, detailing how each applies to humanitarian and development programs. It introduces the cost-effectiveness ratio (CER), explaining its role in benchmarking interventions and assessing value for money. Special focus is given to case studies, such as school feeding and teacher incentives in The Gambia, demonstrating how CEA can inform policy decisions. For policymakers, evaluators, and development practitioners, this document is a key resource for integrating cost-effectiveness considerations into program design and evaluation. It highlights best practices in cost data collection, impact measurement, and scenario analysis, ensuring that interventions are not only effective but also financially sustainable. Whether comparing alternative intervention models or scaling up successful programs, these insights support data-driven decision-making and optimal resource allocation.