Sachin Sharma walks through how CFOs can control costs without creating friction. Set spending limits that avoid bureaucracy, track what employees actually buy, focus controls on the 20% of spending that matters most, and balance growth priorities with processes that let people work.
So here's how to set up your spending limits so that your employees don't hate you. If you want to do cost control, right, you have to think about not making it overly bureaucratic process. And you do that by setting up spending limits. Obviously a lot of people call delegation authority or DOA and so on. But the main idea here is don't make it overly bureaucratic process, that for you to buy a pencil, six people need to approve it, right? So the way you think about that is how can I enable my employees to do their job in an effective way while controlling cost? And that's where you think very hardly about like, what do you set up by spending limits? Because a lot of times we have seen companies setting up spending limits out of nowhere. There's no, like, okay, everybody should have a up to $500. They can just approve, you know, there's no approval required. They can just buy whatever they want to buy. Now many people don't ask that where their 500 came from, right? I mean, did you do a study? Did somebody tell you? And most of the time if you ask them, they would basically say, oh, I heard from somebody, I read it somewhere. Or this is what my previously we used to do. And unless you're moving from one industry to another, that answer doesn't matter. So what matters is understanding what people are buying, how often they're buying, and what should be the spending limit so they can continue with the business without, you know, and having an impact on cost control. So having that study, and I think I've touched upon in my previous videos, this 8020 rule is you got to focus on your spending to come up with your own spending limits so that people are not. You don't want employees to complain about a cost control process. It should be smooth. And that's the end result of that. If you have a smooth cost control process, that's the best process in my experience. I haven't seen any company or any place where cost control doesn't make sense. Eventually every company needs to have a cost control process. It might not get the same attention on day one on the nature of the company, right? Because there might be situations where you're fighting for your survival. Cost control is important, but you're probably competing in a, a business where, you know, where most of our generative AI companies are going to be today, right? Because there's so much competition, everybody's coming up. So right now it's just like, who can get the top of, you know, mind share faster and who can get customers faster in a certain use case, and then you worry about cost control making profitable. So those might be the only caveats, I would say. But no matter what you do, if you're going to have a company, you know, sustainable company, I would say you got to have a cost control process.
