Payroll, rent, advertising and insurance are the four major expenses for most businesses. An Interim CFO can work to control payroll costs one way by using forecasting tools like CashTell. You can optimize both the headcount and the labor hours for different levels of sales by using a forecasting tool to control payroll costs.
When forecasting, both the business owner and their part time CFO should assess many different business scenario possibilities. “Different sales volumes” is one of those scenarios. One must look at what happens to the model when different ranges of sales volumes are entered when forecasting. A forecasting model worth its salt should be capable of determining the optimum amount of labor hours for each level of sales and the optimum headcount. Because this information lets the business owner and CFO know in advance as sales increase or decline, the forecasting model is a great tool for deciding how to schedule workers, maximizing efficiency and managing payroll costs.
The word “labor hours” often brings to mind manufacturing exclusively, but in reality managing payroll costs through labor hours can be done in all types of businesses. To schedule their employees, store managers in the retail business when I was working in it were given a set amount of labor hours each week. With out exclusive permission granted by logical reasoning, these managers were not allowed to exceed those allocated labor hours. Those labor hours were determined by my forecasting tools. If at the start of a work week the sales were deviating from my original forecast, I would then issue or withdraw more labor hours as needed. The store managers complained about the small allocation of hours they received, however, interestingly the limits put on the labor hours got the job got done more efficiently than it ever had been, without sacrificing service.