Material structural costs simply explained

Leasing fees, rents, insurance premiums, contributions for memberships, costs for updates and information acquisition are structural costs that arise completely independently of the intensity of an organization’s activities.

There are always interesting potential savings in this area as well, but they should also be analyzed thoroughly. After all, savings projects of this kind sometimes have surprising and non-obvious effects on other areas and on the future, the consequences of which are often not to be assessed lightly.

Example: The CFO of a larger car dealership that sells premium brands has decided to no longer provide customers with a replacement car when they drop off their car for a service appointment. They now receive a cab voucher. On the surface, this saves the dealership money. But what happens in practice? When you, the customer, get into a cab in front of the dealership, the cab driver immediately asks you, “Is your car broken again?” Throughout the cab ride to the office or home, you learn what other customers of the dealership have experienced with their vehicles or in the course of a service. The previously positive image that the dealership had is at least tarnished. Whether the switch from the replacement car to the cab voucher has now paid off on the bottom line is doubtful.

Example: In the 1990s, many areas of the public sector in Germany sold their properties and leased them back from the buyer. The fact that the public sector found itself in a poor negotiating position was reflected in correspondingly one-sidedly formulated lease agreements. In the meantime, it has become clear that this type of short-term capital procurement will still cost the treasury dearly, because not only were the expenses for maintaining the properties generally passed on to the tenant but the properties today are also often worth many times the sales proceeds achieved at the time.

Should you implement savings projects in the area of structural costs, weigh up the possible direct and indirect consequences in advance.

Under no circumstances save on occupational safety measures.


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