Companies are cutting expenditure across the board, but many will be shocked to learn that according to ttMobiles, the UK’s first wireless expense management company, the average company mobile phone bill has £1 in every three spent on personal phone calls* – suggesting a loss to UK corporates of over £1bn annually.

No matter the size of your business, having your staff expenses effectively managed can minimise costs and increase time-efficiency, as less time and resource is needed to perform tax compliance and general expense management.

With mobile phones, for example, while most employers accept that company mobiles or blackberries will also be used for personal calls, choosing the right contract can prevent businesses being hit in the pocket, avoiding problematic staff monitoring and ultimately keeping your workforce happy. Add to this the number of mobile devices that are unaccounted for, the increasing number of home workers claiming for home internet use, clearly businesses need to keep looking closely at avoiding unnecessary costs.

Every employer knows the importance of operating efficiently and continuing growth despite the current economic climate. Joining us on our live and interactive WebTV show are Ian Kay, Managing Director, Banking, London at The Royal Bank of Scotland, to offer general advice on how best to manage your cash flow and make the most of the financial support that’s available; and Peter Readman, director, ttMobiles, to specifically discuss how you can manage your telecoms expenses effectively.

* based on research by Quocirca

H: Ian Collins, Webchat host
A: Ian Kay, Rbs
B: Peter Readman, ttMoblies

Hello, I'm Ian Collins and welcome to the Business Show. Now managing your business finances effectively is always a challenge. From overheads and cash-flow management to negotiating suppliers' costs, constant attention to detail is of course crucial. Whilst many firms know the obvious ways to streamline their business costs, there are a lot of hidden costs in there which are perhaps more difficult to manage. Joining me today to discuss these issues, Ian Kay from RBS and Peter Readman from ttMobiles, a company which specialises in mobile communication management. Welcome to you both, gentlemen. And it is those hidden costs, Peter if I start with you, that perhaps do catch some small businesses out?
Yes, I think across the board, mobiles are probably the last big hidden area of cost. If you've got good controls in the business, you've budgeted, you'll have purchase ordering system. You'll know what you are going to spend, bills aren't the surprise, apart from the mobile bill.
Indeed and Ian, I'd imagine pretty much the same you experience this situation where you are looking at a successful company and thinking, well actually you know, there are certainly hidden costs in there that aren't always, at first, visible perhaps.
That's right Ian, and I think that the difference this time... I've seen a number of recessions through the years that I have been working with RBS but it's the speed of this one that has caught a few people out but I have to say how resilient businesses are and there are some fantastic actions out there that people have taken, maybe explore later on.
Yeah, I was going to say, let's take a look first of all then, at those hidden areas. What are the obvious compartments within a business that you would look to begin with, if you were looking to cut costs?
I think the people who have been on to it quickest are those who've realised that the terms of trade they were using in the good old days, you know, look kind of different to what the needed in more challenging times. So that would be the first place I would go and I'd recommend people go. Literally the terms, the contractual terms of doing business with their client base and those have been amended and improved by the more efficient businesses to, you know, to make sure they are fit and well coming out of recession as well as going into it and coming through it, so those kinds of areas. Management of cash flow, absolutely essential and that's not just the flow of cash but who you are doing business with, it's what are the internal systems in the business to collect cash and who are the customers you are doing business with, not just now but likely for the future as the up turn inevitably comes.
And I'd imagine Peter the same in the communications industry whilst a different industry from banking you experience pretty much some of that as well.
Yes indeed. Um, obviously there is pressure to reduce costs across the board, there always is and mobiles, with more people having smart phones, more devices, doing more with them. Although the costs of tariffs has been coming down there has been an inexecrable increase in the overall spend on mobiles. Now in the current climate that clearly isn't tolerable and people need to take action and in fact we can see a big shift with people starting to look at how we can control that without throwing out the baby with the bathwater.
I was going to say, because that is the key isn't it. At the end of the day you guys are running companies that need to be retained and the image, the product has to stay there but the trick of course is to find a way of reducing the costs at difficult times must be a pretty tough one, but there are ways to do it.
Um, there are indeed. It's mainly a matter of getting organised and the problem historically with mobiles has always been a lack of accountability and responsibility. It's grown organically, departments, individuals making decisions all of which made sense at the time but collectively, wastes a lot of money. So the kinds of tricks you can employ is first of all get responsibility and get control over the mobiles.
There is a fascinating piece of research that was done, that £1 in every three mobile calls are personal ones. Yes. So that's coming from staff going out is it?
Essentially yes. People are handed a mobile phone, sometimes employers say you can make reasonable use for private calls. What on earth is 'reasonable' and how do you measure it? Sometimes people have polices that you can't use it privately but if you have no way of measuring and monitoring, how do you know? So keeping a control over that is quite challenging but it can be done.
And I guess with RBS Ian as well, I know it's a different industry so you might not experience the mobile dilemma in the same kind of way but of course with staff, obviously, you want to protect and retain staff but at the same time you have to be realistic.
No that's right and I think that's my good practise and people who search out best practise because I don't think it's a case of reinventing wheels, Ian because there are very good businesses out there already doing things really, really well. Perhaps not everything well, so some of the things we'll talk about I think later during the questions session relates to customers who go in search of others who are very, very good at what they do in certain areas, learn from the best and then replicate in their own business.
Is it just down to bosses like yourself to look for those hidden costs. Can you encourage staff as well? Any ideas, throw them in here because you are the guys out there doing the job on the shop floor as it were. You know, if you come across anything and think, hang on this is just a waste of money, we can do this in a different way.
Yeah and the more... one of the keys of coming through, you know, a period like this is, sure talk to your own customers but my goodness me make sure you are talking to your own people and they can absolutely genuinely make things better for the future.
Yeah, and I guess in a company like your own, the same...
Certainly one of the things we try to encourage is have the visibility of mobile bills so the department and cost centre managers can see what's happening in their department. That individuals have visibility of their own bills and if there is something strange either at a department level or an individual saying 'hey, I never make that call' they've got the ability to respond, pick it up. There are a lot of billing queries out there. The networks don't always get the bills right in fact you can't assume that at all.
How do you cut costs without clients smelling a rat and wrongly perhaps thinking hang on its all going pear shaped over there.
I think by... well, two ways I would encourage people. I think first of all form a banking perspective involve the bank early but I don't mean just in talking about finance. I'll give you an example; on Monday, I spent a day with one of the clients that I've been involved with for many, many years having had them from the start up position through to a large business now and every year they invite me back for a day, not with the main directors but to just go spend time with kind of the whole sales cycle in. So yeah, an hour with the marketing people followed by an hour with the sales guys, an hour with the finance team and at the end of the day we have a wash up with the directors who I know very well and within that day we inevitably find, year on year on year, whatever the circumstances, efficiencies, better way of doing things and real insights both ways so for the banker he sees the business properly and has an informed discussion with the directors. And for the directors they kind of get an objective view from within the business rather than just round the table for an hour and a half.
And Peter in mobile communications being the obvious cost mobiles, what else is in there, what else sits within those hidden costs?
A variety of things we've identified about a dozen different areas of waste and cost and a lot of it is waste. You asked the question, lets cut the cost we can impact the business, a lot of it is pure waste for example we take on new customers we found that 12% of all the phones don't appear to be in use. They're making no calls. They're on the bill, nobody knows where these phones are, nobody knows where they've gone
So these are companies that have bought phones from you
Yes, over the years phones people have left
Just aren't using them
And it's in a draw or its lost or stolen it's still on the bill. We find up to 4% of phones are with people who've left the company. We've found people who have left companies 4 years ago still happily using their company mobile! So there's areas of waste there that if you can't track and trace, understand the database, who are your employees, which ones have mobile phones, which package are they on. Keep that database up to date and be able to compare that with the bills. It's just good management practice.
I know you mentioned earlier on, about the difficulty of knowing what are for example personal calls from business calls. Have you found a way to be able to monitor that? Because it's very easy for somebody to say actually well that was a business call that person's a contact and I had to ring them when really it's aunt Jo round the corner organising the Christmas do.
We have some technology for dealing with that we have an internet based solution where people can upload their phone lists and say this is private, this is business and of course that's very viable as that a business contact. Our system will then populate the phone bill with the names and was that personal was that business. And then for any new calls people can go in and tag it. Now ultimately the test is; are they lying? But if you have a robust policy that says people have to declare this correctly, then most employees, given the right rules are fundamentally honest and at the end of the day you can always ring that number and find out that it's Aunty Doris.
So that's done as a computerised system rather than some poor old character sitting down at a placement somewhere, going through reams of paper and bills and a big old highlighter pen!
We've found situations were one local authority for example they were sending out three and a half thousand separate bills to everybody. Everybody then sits and goes through with a highlighter pen to see which is private or not. Sends them all back into finance, finance send them all onto a computer system and allocate them to costs.
I can't believe there's inefficiency in local authority, staggering fact.
In that particular case they adopted our solution so in actually fact they became vastly more efficient
We've got some questions. We are, of course, live. You can submit your questions in the box below the screen and of course, we'll answer as many of those as we can. Let's take one, first of all, from Alison Walker. Peter, on the subject of hidden costs, I do wonder if offering free for all access to social media sites is counter productive. Where do most large corporate stand on this? We are only a medium sized firm.
Mmm, an interesting one, we as a business have compromised on that. There are IT solutions that can block certain sites. So we block things like Facebook during working hours but lunchtimes, evenings and morning's employees are allowed to use it. Now we don't see a great deal of business benefit from some of this social networking for our particular business but I think that's for the business to decide but certainly the technology exists to turn it off.
It's a close call isn't it Ian, between that; staff satisfaction, being able to ensure... not feeling as if you are working in such a ridged environment that you're not enjoy it. I was walking a road recently and I passed an office and pretty much every computer screen had Facebook on it. So these were a lot of people, clearly not doing a lot of work at the specific moment.
Yeah, it is a fine balance Ian. We have our own, very clear policies and you can imagine which way they are slanted i.e. to always make sure that people are working the vast majority of the day. By the same token, you know, you have human beings there doing a very good job and they need some element of freedom but I think it's only sensible that the businesses themselves are very clear with their policies and indeed make it clear to the individuals concerned. So there is no surprises.
This comes from Alan Baxter; Ian, how many businesses have you come across which have failed due to cash flow problems and why does cash flow... why is that cash flow is where people tend to stumble over most?
Yeah, it's a great question and over 35 years, as I say, of an up and down world it's absolutely the case, most businesses don't fail for profitability. They fail because they run out of cash or perhaps don't even manage the cash well enough and so the question is absolutely so.
And there that whole thing of talking to your bank as well, it's not uncommon to here someone have a moan about a bank and then you ask, well, have you been in to see the bank they say, well, no. Well, of course that's going to be one of your first steps when you are talking about cash flow.
Yeah that's right, and relationships are genuine. It's in no one's interest not to help and it never has been, Ian. The sooner the relationship is established and sooner the discussion takes place the better and as I said earlier on, maybe not just an hours meeting but immerse the banker, whoever he or she may be, from which ever bank, in understanding the business and then talking about the finances relating to it. So the more you can help people see and understand the better.
Back on the issue of mobile communication, James Hayricks asks, are there systems in place, Peter, to keep on landline usage as well. You were talking about mobile usage but of course the landline is still there and pretty much every desk has one.
Well I think a couple of points, yes there are similar technologies for that but the cost of operating a mobile, again independent research, is 10 times as expensive as a landline phone. So you go after the big numbers first but yes, those technologies exist. One of the difficulties with landlines is pinning back a call to an individual. With a mobile you can be pretty certain 'that person that phone' where as when you've just phone is offices you can't be sure who has made which call.
Sure. Here's a great question. It comes from an office manager. A real frustration I have is people in our office printing off books on our printers. Toners are very expensive as are printers in the first place. How can we better manage this area? Now that is a great one, I mean, we're replacing the toners every 10 minutes, it seems.
They are pretty pricey. The technologies do exist, the bad news is it probably means investment in new printers but certainly you can get card based systems where by in order to print something, somebody needs to put their card in and the system will then tag this person printed this many pages, this date, this time and that information can then be collated and made accountable say, to the cost centre department.
Is that a huge cost just in terms of basic paper and printing? And is there a way to address that to cut back as well?
It can be and it depends on what kind of company you are taking about. It can clearly be the difference between rise and fall. Um, it's not what I see that will bring customers down but I guess it might be indicative, if there is not clarity of policy around those sorts of things. Then it kind of suggests lacking clarity in other areas as well then you get an inefficient business. So it might be indicative but it's rarely the single thing that makes such a difference.
Peter do you want to come back on that?
No, I think that covers the point exactly. And so much of this, not just comes back to best practise but to policy. If you have clearly thought out what you want, what you want from employees, they've been educated in it and have signed up to that policy then you are saving yourself a lot of trouble and whether that's mobiles or any other for of communication.
Ok, here's a question from Alan, who says I'm considering taking out a business loan, what are the first things I should think about? I'll direct this to you, Ian.
Yeah, the key for me would be the business plan. So not just asking for a loan, it sounds obvious but still quite a lot of people simply ask for a loan rather than what's the future goal that the loan is for and how does the strategy unwind. So again it's the big picture. So it comes back to helping the banker understand the single purpose of going for a loan. Viability, absolutely key Ian. So if the guys are concentrating on anything, they should be staring and finishing with... not only is the loan repayable now with the historical really low interest rate environment we have but what happens if interest rates double, triple quadruple or more. Is the business still viable and that's what the banker will look at.
It's a bit like that mistake that people make when they go to the doctors isn't it. They don't want to read out their symptoms because they think the doctor has to do that but I know that at RBS no one's offended if somebody turns up with a big list and says look this is what I want to do, this is where I want to go, you are perfectly fine and relaxed about that.
Indeed we are and we've helped more so, as have all banks. So, you know, it's easy for me to say make sure the business is viable but some customers will say, well, what do you mean by viable? So people can now, access each banks website, including ours, for free guides as to how to access finance and indeed how to build that case. Somebody said to me the other day, it feels like they are giving us the exam questions for the first time and I know what he means, and I say we are.
Just a final point, Peter, do you think the recession we have been through, that we are still slightly in, might have a long tail, who knows what will happen next year. But in an odd kind of way do you think it has been, perhaps in an unusual sense, perhaps useful for small businesses in that its forced small and medium sized businesses to look at those hidden costs and in fact, you know, properly lay out where those costs are?
Yes, I think ah... people sit down and look at the fundamentals of business; what are we doing, why are we doing it, is it profitable, can we sustain cash flow from it, is important at anytime but being brought into sharp focus I think lessons have been learnt which, going forward, hopefully as the economy improves, if those attitudes and ways of doing business are going to be sustained then that will reap big benefits in years to come.
Do you share that Ian, that there is kind of, almost a shock value in what has happened with our country in the last year or so you're force to take a bit of a look at things.
Yeah, I don't think any of us would have wished us to learn that way because it came so quickly for all of us but some of the keys here I don't think people should forget the really important point that the banker will have a view across many industries and many sectors and if the customer asks the banker to introduce them to more of his clients not only to do business with but to pick out those who are really exceptional at doing what they do, there is a huge learning in a virtual circle that is not tapped well enough yet.
Ok, here's a question... here's another question just come in that looks at the issue of mobile phones. David says, how do I avoid getting into HR issues by clamping down on usage? And that's a real fine line isn't it.
That's a very good question and I think it comes back to policy again. If you set your expectations we find out customers range from a policy of 'you will no use it for mobile calls... for private calls at all through to you can make reasonable use of it, through to, you can make as much use of it as you like but it will come out of your wages. Now in each case you need to have a policy that says that. When you say reasonable use, what does that mean reasonable? You need to state that. And finally you need to have methods of measurement and enforcement. If you've got a policy, it's got to be believable, if people don't believe you can do what you anything about it.
So companies need to outline this from the beginning really...
That's right, it has to be credible. If people break the rules they have to be seen as taken to discussed.
Question here on that point, from Sandra. A lot of our staff members have company mobile phones we don't have a tight system in place to monitor usage. What do you advise we do as a first step for tightening this up? And I think you have touched on it there, its got to be at the word go, at the outset you've got to make it clear.
Absolutely, I think the fundamental things, first of all, you need to have an across the board policy and endorsement from a senior level that we will have mobile management it will be a cost reduction programme, it has senior endorsement, you know, their aren't exceptions, people can't go off and do their own thing. You then need to, at a practical level, build a database of who are the users, what are the devices. You need to keep that database up to date, most people fail at that. They have a nice list of phones and such like and it goes out of date and then finally when you've got that you can do cross matching against the bills and you can start looking at what's personal, what's business, what's exceptional. A simple thing, calls at the weekend when you are a nine to five company. Calls at 10 o'clock at night are probably not business. So there are a lot of things you can do, rules based on stuff that says, that's probably a personal call. So there are the techniques of doing that there is also the technology for automating a lot of those processes as well and giving you exception reports that say this is what you need to focus on.
Ok. Gentlemen, thank you very much indeed for joining us.
You're welcome.
Good to see you both. Thank you for Ian and Peter for coming onto the show. For more information on efficiency savings when it comes to mobile communication, mobiles communications management you can visit www.ttmobiles.com that's www.ttmobiles.com . That's it from us. Goodbye.