1. Keep a log of all the time you spend with outside experts.
You may not be able to track the time you spend on your behalf in certain cases because it happens outside of the office. In many cases, however, you can track the time spent on your behalf. You will be able verify and/or dispute any bills that you receive by keeping such a log.
If your accountant bills you once per month, how can you remember what he did for you and how long he spent doing it? You will have to accept the billing even if you think it is excessive if you don’t keep a log.
2. Never allow yourself to ever be charged in increments of 15 minutes
This is a common practice for many who bill on-time. Let me show you an example. Your lawyer calls you and they talk for five minutes. The lawyer then calls you back and bills for 15 minutes. You’ve just been overpaid by 30%. This is something you wouldn’t allow anyone to do. You wouldn’t let anyone else do this.
They always round up. They take 20 minutes and then you are billed for 30 minutes. This is a huge scam. This is unacceptable. Pay only 8 minutes for the time you take. You don’t have to pay for 10, not 15.
This can add up over the course of a year depending on how much you earn. As I suggested, keep a log and cross-check all bills to these outside experts.
Let me tell you how quickly this can add up. As an example, let’s say you have an outside expert who charges $125 an hour. This means that you pay $2.08 per minute. If you call this expert 12 times a month, each call lasts for 10 minutes and they record it as 15 mins each time, you’ve overpaid 60 minutes or 50%.
You are giving yourself the opportunity to be cheated if you allow this to occur. This happens daily to thousands of individuals and companies. What are you getting for this extra cost? Nothing! It’s better to just throw the money out and open your window.
3. Always be ready to speak with outside experts when they bill you on time.
At $125 an hour, ten minutes of small talk will run you $20.80. If they bill you for 15 minutes, this figure could be even higher. Be clear about what you are looking to discuss and be ready to talk about it. You must conduct your business efficiently and close it quickly. The time is like a faucet that produces $1 bills. You have $1 bills. What would it take to get this off? Damn quick I hope.
4. If you don’t have to have it in writing, they should not be allowed to put it in writing
This is a popular tactic used by outside experts. You will get the answer, advice or opinion that you need verbally, over the telephone or in person. Then, they will follow up with a letter confirming the same thing for your records. This is a great idea. You don’t have to pay twice for the same thing. The confirming letter that they send will be charged to your credit card.
You should not be given a written record unless you have compelling reasons to do so. You can refuse to pay if they send one you didn’t ask for. I understand that sometimes a written record is necessary. In these cases, ask for the reply in writing and get rid of any additional billing.
5. You should insist on detailed billing for any service you purchase from an outside source.
This is especially important when you deal with “experts” who try to sell your time. To ensure that their billings match yours, and to determine if there are any charges for work done offsite at their office, you will want to carefully review these detailed billings.
You are being charged an hour for a letter you wrote at your lawyer’s office. It is two paragraphs long and basically a boilerplate form letter word that was processed by a secretary. The time taken to write a letter is exaggerated. A secretary’s work is also being charged as lawyer’s.
Never be afraid to ask for a bill or charge. Always demand a breakdown of the work performed, the time it took, the hourly rate for the person responsible, and the cost for each invoiced amount, including photocopies and faxes. A lot of times, an adjustment will be made based on a billing department error. Although it is a hoot, the final result is an adjustment.
6. Ask for an estimate and then negotiate the hourly rate.
Time is a commodity that outside experts can sell. This is their product. It is in their best interests to increase the project’s time. To minimize time spent on projects and get the best results, it is in your best interests to keep the hourly rate as low as possible.
You have the greatest leverage when you first approach a company to do business with them. They want your business. They will not make any concessions in order to win your business. To get your business, hourly rates might be reduced.
Their hourly rate is merely a price list for their product. When estimating the time needed to complete projects, they are more likely to be conservative. These estimates will be held to your standards.
This can save you thousands over accepting any rate they offer and then having them work for you without any estimate of time. Don’t be surprised if they refuse to work with you about the rate or don’t provide an estimate of the time needed when you ask. Find someone else.
7. Even if your accounting staff is complete, you might consider hiring an outside accountant to periodically review their work and ensure compliance.
They will be able to spot irregularities and discrepancies in this department’s activity more easily.
Derrick Welch, author of “In Pursuit Of Profits: How at Least Double Your Profits without Increasing Sales”, provided this edition of The Welch Report. This report includes 1,000 cost control, expense reduction, and income producing strategies you can start using today to dramatically increase your bottom line.