Agribusinesses that are thinking about cost cutting in 2017 should evaluate telecom costs before they look at inputs, seed, or machinery.
All you need is a family cell phone plan to know that telecom invoices are complex and often do not provide full details about your services. With technology constantly changing, it is easy to get overwhelmed by the myriad of options available. And telecom providers don’t necessarily review your account to ensure the pricing is accurate or updated.
Agribusinesses and cooperatives face these same challenges, multiplied by many users and typically multiple locations. In a year that promises to be economically challenging for the industry, evaluating your telecom costs may reveal some valuable cost-cutting options.
The cooperative ended up with a monthly savings of $3,774 — more than $45,000 each year — an annual savings of 26 percent.
Case study one: costly unused services
The leaders of an agribusiness with locations in 14 counties in 2 states had a feeling they were paying too much for telecom services. It had 46 accounts and 17 service providers, so it was challenging to keep track of what services went where. CLA’s team stepped in to help.
We started by making an inventory and examining all of the services at each location. We identified several services that were underutilized and were costing hundreds of dollars each month. Some locations had several business lines that were not even used, in addition to quite a few idle toll-free numbers.
Our team also identified a few accounts that had significantly lower rates than the majority of the others. We cross-referenced similar services that were billing at escalated rates. We were able to identify over $700 in savings by switching long distance and toll free providers, all without impacting services.
In addition, our team reviewed wireless expenses and discovered a messaging feature billed on voice devices and static IPs billed on most data devices. These features are typically added by the provider to boost sales numbers. We have also seen companies try these features and forget to remove them. In this case, these extras were not being used and were most likely added by the provider during a recent account review. There was more than $400 in miscellaneous features just on one account.
All of this was brought to the attention of the agribusiness for review. In the end, our team uncovered savings of more than $6,000 a month — $72,000 each year — an annual savings of 21 percent.
Case study two: cooperative finds expired contracts adding up
A cooperative with 28 locations had a busy operation. The staff was consumed with everyday activities, leaving little room to take on cost savings initiatives. With multiple telecom accounts at each location, it was difficult to track expenses. Our telecom advisory team came in to help.
We first created an inventory of every account to get a better understanding of the services available at each location. We then proposed several cost savings plans, and received the cooperative's approval to implement the recommendations.
At most locations, the accounts were billing at tariff rates, meaning the accounts were out of contract and the rates for the services had escalated. Our team contacted the providers to discuss the options for each account, many of which qualified for new rate plans and promotions. For some locations we helped combine services into one account, making it easier to process internally. Many locations had long distance usage billed on separate accounts, which made it difficult to keep track of what was being used and where. Our team identified the long distance charges by location and transferred services to the local provider. This consolidated several accounts and eliminated unnecessary fees. We also researched the current market rates for similar plans to propose lower usage costs.
Finally, we identified services and features that were not used. For example, some of the wireless devices had an expensive insurance plan, even though the covered device was a flip phone. Some of the landline services were also paying a monthly charge for a “wire maintenance” plan, even though those locations never experienced service issues. We compiled a list of features based on location and, if applicable, phone number, and we worked with the cooperative to eliminate unnecessary features.
The cooperative ended up with a monthly savings of $3,774 — more than $45,000 each year — an annual savings of 26 percent.
How we can help
The agriculture industry may be looking at cost cutting measures in 2017, and many agribusiness and cooperatives may face a rough couple years as they struggle to balance everyday operations with lower commodity prices. While telecom expenses are necessary to do business, services and contracts should be cost effective and necessary to the business — not just a pool of costs that grows from year to year. CLA can help can help you fully understand your telecom expenses and explore ways to produce some valuable savings.