March 23, 2021

How Your CFO Can Help Cut Cleaning Costs

Budgets. Financial Analysis. Cost Reduction. Company Goals. Cash Flow Management. Taxes.

Your finance department shoulders a lot of responsibility that directly affects the overarching goals of the organization. The role of the finance department is to manage all cash in and cash out, control expenditures, and create a financial plan that helps guide the organization to success.

During any time of major change and upheaval, such as returning to work after the pandemic, having a clear understanding of financials including short-term and long-term expenditures, and different financial goals based on department, is imperative to the future success of the company.

Unfortunately, in the past it has been all too common for CFO’s to be left out of transformational decision making—and instead, left to make shifts and adjustments after decisions have already been made.

According to McKinsey, without seeking leadership from CFO’s initially, a complete financial understanding of a company's position is lost and can have negative effects on financial goals and business performance:

“...without the CFO’s leadership, certain key elements of the transformation are likely to receive short shrift: performance efforts will lack a meaningful benchmark to gauge success, managers will be tempted to focus on the biggest or most visible projects instead of those that promise the highest value, and expected transformation benefits won’t make it to the bottom line.”

So, even during times of normal business operation, keeping your CFO apprised of and involved in decision-making processes that affect company financials is imperative to success of the business.

This is true for equipment purchasing decisions as well. For the cleaning industry, returning from shutdowns experienced during the pandemic, there will be much shifting and evaluating the usefulness of cleaning equipment.

Involving CFOs in decisions on how to move forward is necessary to be sure cleaning teams have the resources they need, and the adoption of new equipment is done with a complete view of company resources. This could even help a business save money.

CFOs’ Understand Financial Standing and Company Goals

Since a CFO typically oversees the entire finance department, they have a broad understanding of where a company stands financially, on top of understanding the nuances and details of how each department directly impacts another, and then how those financial responsibilities impact the company.

As BSC’s and businesses start to open their doors and return to work, the examination of budgets and expenditures will be a top priority.

After extended periods of time being closed, many businesses will find that their floor cleaning equipment has sat for extended periods of time unused. This means batteries that have lost their ability to charge and are potentially corroded, as well as already aging equipment that will now either be rendered obsolete or on its last leg.

On top of equipment that will need to be replaced, budgets are tight due to lost income and work time. Making decisions around the best path forward for a company should involve the CFO—as they have insights into fluctuating markets that can impact other avenues of the business. This insight allows them to help guide towards decisions that are proactive versus reactive.

McKinsey points out that even having knowledge of key markets is imperative to how a company should spend its money. “For example, for an equipment manufacturer in an industry facing rapid price declines, the prior year’s performance wouldn’t work as a baseline for setting transformation goals. Instead, managers would need a baseline that reflects forecasts for how much prices would deteriorate, both overall and by region.”

This kind of key market information is something a CFO would be regularly monitoring and considering as part of major decision-making processes. And, considering information like this can even help CFO’s determine ways to save a company money.

3 Ways CFO’s Can Cut Costs

1) A CFO Can Help Determine Whether to Rent Vs. Buy Commerical Cleaning Equipment

In some cases, companies must make the decision on whether it is better to rent or buy cleaning equipment. Owning and managing floor cleaning equipment can be costly, especially for large companies that often purchase hundreds of machines.

The total cost of ownership is often not taken into consideration when cleaning equipment purchasing decisions are made, and this can be a costly mistake, as the decision does not consider the cost of service, routine maintenance, repairs, and the loss of money due to equipment downtime.

A CFO who is regularly involved in equipment purchase discussions would be able to evaluate the cost effectiveness of owning versus renting based on historical operating data.

For example, companies like ICE Robotics offer a flexible, all-inclusive subscription service. This is essentially a long-term cleaning equipment rental program. Payment is spread out over the course of a set number of months, typically 36, and the company renting is responsible for a set monthly payment.

Involving a CFO in this decision would help a company determine if avoiding large upfront capital expenditures is better for the overall budget long term. They would also be able to evaluate the impact of having a monthly payment and how that would affect monthly cash flow.

Additionally, with their help when considering a long-term rental versus an outright purchase, they would be able to analyze savings through a larger lens.

For example, on a scrubber with a purchase price of $8K—a company would eventually end up spending twice that amount over the three-year useful life of the machine in service, parts, battery and administration costs—those unpredictable expenses noted early. And that is one machine.

Including the CFO in this conversation would help uncover any additional hidden expenses of ownership, and they would conduct a cost analysis based on the number of machines a company needs to get the job done successfully. Over time this data would reveal that a subscription service on multiple machines can save a company 20% in total cost of ownership per machine.

2) A CFO Can Help with Machine Maintenance Planning

Machine maintenance and service costs add up quickly—it is estimated that over the three-year useful life of a typical floor scrubber or sweeper, businesses can expect to pay almost 2x the cost of the equipment.

Since these costs are often not considered as part of the total cost of ownership when purchasing a machine, the bills become even more burdensome because they come as unexpected surprises.

For a finance team, planning is key! Having unexpected maintenance and service bills show up can throw off budgets.

Over time, a CFO would be able to bring this collected data to the conversation and present accurate total cost of ownership based on how much a company spends annually on maintenance, repairs, and service, in addition to the cost of buying the equipment.

Collecting and monitoring this data can help the facilities maintenance manager determine how much to budget annually for maintenance and repairs, build that cost into department budgets, and set a regular maintenance and service plan that can result in active maintenance instead of reactive maintenance, which ultimately costs a company more money.

On top of that, when a solid budget is in place and teams are aware of how much maintenance and repairs cost a company, leaders and managers in the company can start to speak to this information to inform and train employees better. Communicating proper machine maintenance can have a positive impact on employee's health, machine run time, and job completion—all of which can save a company money.

3) A CFO Can Help with Better Payroll and Cost of Labor Planning

As autonomous cleaning equipment becomes a larger part of the conversation, it is important for a CFO to understand how this equipment impacts the company on a financial scale.

Autonomous equipment, like Whiz, distributed in partnership by ICE Robotics and SoftBank Robotics, can have many benefits: it frees up cleaning staff to focus on other tasks, adds more help without adding a body, does not call in sick, and can even be programmed to run after hours.

Depending on the business, these features can have many benefits. Making sure your CFO is involved in this decision is key as they can help make accurate cost analysis recommendations and determine the benefits to the company beyond just the initial cost of the machine.

For example, the cost of an autonomous floor cleaning machine may seem like a lot initially. But, what if by adding additional floor cleaning help overnight, the morning cleaning team could spend more time on other tasks like sanitizing and disinfecting high touch surfaces.

When clients or customers arrive, they see this cleaning happening, notice clean floors, and feel assured they are in a healthy space, staying longer and making more purchases, as they have an overall positive perception of the business.

Or, because a cleaning team has had more time to focus on sanitizing and disinfecting, a workspace becomes a healthier place, and less sick days and absences are reported.

On top of that, the costs of high turnover and absenteeism, that regularly affect the cleaning industry, could be offset by brining on an autonomous cleaning machine—and this financial data could be tracked by a CFO.

Adding a CFO to equipment purchasing decisions means more company wide data will be considered and evaluated.

Over time, this will save a company money because budgets and spending are done with more inclusive data and a plan that considers much more than just the initial decision.

ICE Robotics equipment specialists are ready to answer your questions—let us know how we can help!

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