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The Cost-Center Most Finance Teams Ignore

Finance departments are supposed to focus on controlling costs, right? Employee costs, healthcare costs, capital costs, manufacturing costs, supplier costs—you name it, if it costs the company money, the finance organization will be all over it, right?

But given this extreme focus on cost containment and cost reduction as a means of improving profitability, something has always puzzled me…

Why don’t more finance organizations focus their attentions on containing or reducing the tremendous cost of over-discounting in the field?

For a typical B2B company, it’s not unusual for shoddy pricing and discounting practices to be costing the company millions of dollars in margin erosion each and every year. In fact, the amount of money some companies are leaving on the table through unearned and unwarranted discounting surpasses their entire facilities budget.

It’s a huge cost-center. Yet, it’s all but ignored by most finance organizations. Why?

Maybe they don’t recognize discounting as being an avoidable or controllable cost. Maybe they view pricing and discounting as some sort of “market force” that you just have to accept and work around. Or maybe they just don’t understand it well enough to devote more attention to it.

Whatever the reason, it represents a missed opportunity. And given the uncertainty around top-line growth in the next few years, it’s an opportunity that finance organizations can no longer afford to ignore.

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