10 Appetizers for
Managing Costs
and Your Business
by
David Eu
Managing Costs & Managing Business
Business Advisors to Growing Businesses
Appetizers – Managing Costs
1
• Outsourcing
2
• Tax Incentives
3
• Centralised Procurement
4
• Internal Controls
5
• Audit Exemption
Business Advisors to Growing Businesses
Appetizers – Managing Business
6
• Implementation of budget / forecast
7
• Bench-marketing to market leaders / competitors
8
• Analysis of key performance ratios / Dashboard
9
• Efficient use of resources / optimise working capital
10
• Customer loyalty program
Business Advisors to Growing Businesses
Outsourcing - Definition
• Contracting out a business
process to a third party, such
as Accounting, Human
Resource or IT
• Includes both foreign and
domestic contracting
(includes offshoring or
relocating a business function
to another country)
(Source: Wikipedia)
Business Advisors to Growing Businesses
Outsourcing - Advantages
Business Advisors to Growing Businesses
Outsourcing – Quote of the Day
Business Advisors to Growing Businesses
Tax Incentives
• Corporate Income Tax
Rebate (CIT Rebate)
• Productivity & Innovation
Credit Scheme (PIC)
Business Advisors to Growing Businesses
Tax Incentives – CIT Rebate
• Granted to all companies and registered
business trusts for YA 13 to YA 15
• CIT rebate computed based on tax
payable amount after deducting the setoffs (e.g. DTR and UTC)
• Does not apply to income of a nonresident company subject to final
withholding tax
Business Advisors to Growing Businesses
Tax Incentives – CIT Rebate Benefits
• Relieves some cost pressures
• No application required
• Immediate cash flow benefit when included in ECI
(Consider resubmission of ECI if already submitted)
• Consider deferring your capital allowance claims or plan
your group relief for YA 2013 to YA 2015 to maximise CIT
rebate benefits
Business Advisors to Growing Businesses
Tax Incentives – PIC Qualifying Conditions
(Source: www.rivin.com)
Business Advisors to Growing Businesses
Tax Incentives – PIC Benefits
PIC
Scheme
• 400% tax deductions on up to $400,000 of
expenditure per year
• Claim in income tax return
PIC +
Scheme
• 400% tax deductions on up to $600,000 of
expenditure per year from YA 2015 to 2018
• Claim in income tax return
(Source: www.iras.gov.sg)
Business Advisors to Growing Businesses
Tax Incentives – PIC Benefits
PIC
Cash
Payout
• Cash payout on up to $100,000 of expenditure
per year
• Submit PIC Cash Payout Application Form and
Hire Purchase Template to IRAS
PIC
Bonus
• Additional Dollar-for Dollar matching cash
bonus from YA13 to YA15
• No separate application required. Claim
together in Income Tax Return or PIC Cash
Payout Application
(Source: www.iras.gov.sg)
Business Advisors to Growing Businesses
Centralised Procurement
Definition: Purchasing made either by company headquarters or
some regional or divisional level.
Business Advisors to Growing Businesses
Centralised Procurement
• Advantages
• Minimise costs i.e. economics of scale
purchase price, volume deliveries reduces
delivery charges
• Better control of inventories i.e. kept at
optimal level via automated purchase
system
• Disadvantages
• Delays as requires time to collate
purchases across departments
• Not cost effective to buy system for small
entities
Business Advisors to Growing Businesses
Internal Controls
Definition;
Systematic measures (such as reviews,
checks and balances, methods and
procedures) instituted by an organization to:
(1) conduct its business in an orderly and
efficient manner,
(2) safeguard its assets and resources,
(3) deter and detect errors, fraud, and theft,
(4) ensure accuracy and completeness of its
accounting data,
(5) produce reliable and timely financial and
management information and;
(6) ensure adherence to its policies and
plans.
Business Advisors to Growing Businesses
Internal Controls
Business Advisors to Growing Businesses
Audit Exemption
Business Advisors to Growing Businesses
Audit Exemption
• Exempt Private Companies (EPCs) with an annual turnover of less than S$5
million are exempted from statutory auditing requirements.
• Instead of filing audited annual accounts, the EPCs have to merely submit a
declaration of solvency signed by the directors and company secretary.
• If, for any reason, the solvent EPC is unable to submit the declaration in the
prescribed form it must submit its unaudited accounts to the registrar, ACRA.
Business Advisors to Growing Businesses
Audit Exemption
• Proposed change by the Steering Committee for Review of the Companies
Act on accounts and audit for small companies.
• A small company is defined as a private company and if it fulfils two of the
following criteria:
– Total annual revenue of not more than SS$10mil;
– Total assets of not more than S$10mil; and
– Number of employees of not more than 50.
(Source: https://www.acra.gov.sg)
Business Advisors to Growing Businesses
Implementation of budget / forecast
In business, a budget can be defined as a
plan for an organisation's outgoing expenses
and incoming revenues for a specific time
period.
Budgets are used in many organisations to:
Track and control spending.
The purpose is to ensure that available funds
are used according to plan, within preset
limits and not exceeding available funds.
Support funding requests.
The purpose is to justify the use of funds and
to help plan future spending accurately by
describing how funds will be used.
Business Advisors to Growing Businesses
Bench-marketing to market leaders / competitors
Business Advisors to Growing Businesses
Analysis of key performance ratios
(Source: http://www.subjectmoney.com)
Business Advisors to Growing Businesses
Dashboard
Think of the dashboard of your car.
What do you, as the driver, really needs
to focus on in order to keep using your vehicle?
Take the same approach with the numbers!
One clear summary page, which
highlights key performance elements.
A picture tells a thousand words.
Business Advisors to Growing Businesses
Dashboard
• Use advanced excel functions to
synthesise data into meaningful
visualisations
• Reports with summarised information
rather than raw data
• Enhance decision making process
through building of powerful charts
• Interactive controls for direct user
interface and easy navigation
Business Advisors to Growing Businesses
Dashboard - Examples
Business Advisors to Growing Businesses
Efficient use of resources / optimise working capital
Business Advisors to Growing Businesses
Customer loyalty program
• Retain existing customers and
attract new customers via
redemption rewards program
• Reduce A&P costs via using
existing database to perform
targeted marketing
• Using tiered rewards program to
entice customers to level up their
spending
Business Advisors to Growing Businesses
Business Advisors to Growing Businesses