How to Do a Cost Reduction & Avoidance Spreadsheet

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Tracking the costs that your business saves and avoids can help you make future projections for your company's cash flow and needed cash on hand. One of the best ways to do this is with a spreadsheet program that can point out both hard and soft savings. Hard savings (reduction) are tangible costs decreases from one year to the next. Soft savings (avoidance) are when processes improve while costs stay the same, such as when your employees become more efficient, a supplier offers free training or a free software upgrade improves operations.

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Step 1

Open your word processor.

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Step 2

Write out your expenses and group them into categories.

Step 3

Open up an Excel spreadsheet.

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Step 4

Type "Expenses" in the top left cell on your spreadsheet.

Step 5

Move your cursor down one cell.

Step 6

Press the B-shaped bold button in the "Font" section of your toolbar.

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Step 7

Type out the name of your first category.

Step 8

Type out the names of each expense in the cells below with one expense per cell. Be sure to stay within the same column.

Step 9

Move your cursor down one cell and type "Subtotal."

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Step 10

Repeat steps 5 through 9 for each expense category you have.

Step 11

Move your cursor to the top cell in the next column.

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Step 12

Type "Actuals" and last year's date to label this column. For example, if creating this in August 2013, you would type "Actuals 2012."

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Step 13

Move your cursor down and enter the dollar amount for each expense from the prior year. Do this for all expenses in each category.

Step 14

Label the next column "Current Adjustments."

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Step 15

Move your cursor down and enter the numerical value for percentage increases or decreases expected for each expense as per your contracts. For example, enter "0.2" for a 20 percent increase or "-0.2" for a 20 percent decrease.

Step 16

Label the next column "Baseline."

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Step 17

In each row, enter the formula to multiply the amount in each its "Actuals" amount by one plus its "Current Adjustments" value. The formula will look like "=([Actuals cell number][1+(Current Adjustments cell number)" -- for example, your first expense's formula will be "=B3(1+C3)."

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Step 18

Label the next column "Current Year Actuals." This column will remain blank until your year-end amounts are determined for each expense.

Step 19

Label the next column "Difference."

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Step 20

In each row, enter the formula to subtract its "Current Year Actuals" number from the number in that row's "Baseline" column. Positive numbers are the amount you have saved compared to the year before.

Step 21

Navigate to your first category's "Subtotal" row.

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Step 22

Enter a formula to add all of your category expenses together. For example, if a category's expenses are located in cells A12 through A16, the subtotal formula for the previous year actuals in that category will be "=SUM(B12:16)."

Step 23

Repeat the addition formula for each column.

Step 24

Use the summation formulas for the "Subtotal" rows as in steps 21, 22 and 23 for each category.

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Step 25

Navigate to the first cell in the bottom row that has content in it.

Step 26

Move your cursor down two spaces and type "Totals."

Step 27

Enter a summation formula to add all of your Category expense subtotals together. For example the formula for the "Actuals 2012" total will look something like "=SUM(B17+B30+B35)" if your subtotals are in rows 17, 30 and 35.

Step 28

Repeat the formula for each column in your spreadsheet.

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