High voltage powerlines

Building a Cost-Conscious Culture

February 10, 2020

Building a Cost-Conscious Culture

4 Minute Read

Learn how you can incorporate cost containment best practices into your daily operations.

The downturn experienced in 2014 left its mark on the energy industry. With market pressures forcing organizations to look inwards, companies were forced to undertake cost reduction and containment strategies, adjusting their cost base to align with the new fiscal environment.

Many companies in the industry found and implemented opportunities to reduce spend and move forward with a more efficient operation.

These activities should not be treated as one-time events. To keep the benefits previously achieved, you should constantly be revisiting and analyzing your costs and identifying opportunities to save. Here are three key areas to look.

Spend Analysis and Consolidation

Spend analysis and consolidation can uncover opportunities to consolidate spend and reduce the vendor base, providing the opportunity to leverage the increased volume and reduce cost.

Spend analysis can also assist your organization with the identification of trends and changes in your spend profile, which may uncover strategies to contain or reduce costs and drive value for money.

Contract Management

When the ink dries on a contract, the real work is just beginning. Energy companies need to actively manage contracts to ensure the vendor is delivering the benefits negotiated in the contract.

This is a key cost-containment strategy. The International Association for Contract and Commercial Management found that up to 50 percent of negotiated benefits from a contract were not realized because of a lack of contract management.

Managing contracts can be meticulous work, but given the potential costs to your business, it is a worthwhile investment of time.

Payment Terms

Cost-containment starts at the negotiation stage. Energy organizations can leverage their size to drive down cost through guaranteed spend amounts, volume discounts and early payment terms.

Vendors value cost certainty. If you can provide visibility to, or even guarantee, a spend volume with them in a year, you may be able to leverage that value to drive down or maintain cost.

Another strategy is to negotiate volume discounts. You may not know how much you will be spending with a vendor, but you can use your loyalty as a bargaining chip. Vendors are often open to providing cost reduction incentives when a spend threshold is achieved.

Discounts for early payment of invoices is another proven strategy to drive down cost. When cash flow permits, paying invoices early to take advantage of negotiated early payment discounts can benefit both the parties, as the Company lowers costs while the Vendor benefits from better cash flow.

Let’s Turn Ideas Into Action

These strategies are not one-time events, but rather they are ongoing activities that will drive a culture in your business to continually focus on reducing and containing cost. They establish channels for your entire organization to critically think about your business.

MNP has the experience and expertise to get your teams started on integrating these strategies into your organization. Contact Troy Laursen, CPA, at 587.441.6034 or [email protected] to learn how MNP can assist your company to build a cost-conscious culture.


  • Progress

    May 20, 2022

    Enhanced hospital GST / HST rebates for long-term care facilities

    If you operate a long-term care facility and are currently only claiming the GST / HST rebate for charities or qualifying not-for-profit organizations, it may be time to revisit your eligibility for an enhanced hospital rebate announced in the 2022 Federal Budget.

  • Agility

    May 19, 2022

    Crypto asset mining – A review of recent proposals

    Proposed amendments to tax rules around crypto assets could impact business engaged in crypto mining activities. We explore how new definitions shift GST / HST costs under the proposed changes.

  • Agility

    May 17, 2022

    The power of putting people first

    For your organization to thrive in a modern and competitive workforce, you may need to shift your mindset and your approach towards employee satisfaction.