New Year's Resolution: Trim The Fat Off Your Expenses

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LANSING, Mich. - In an effort to provide strategies to help you make this the most successful year at your credit union, the Credit Union Journal is launching its "7 in '07" series, chock full of great ideas to implement at your credit union.

On tap: an analysis of everything from cost-cutting and profit-boosting techniques, to trends in recruitment and retention. To kick off this series, credit unions share strategies for slicing away at expenses.

1) Review Vendor Contracts

Brian Mcveigh, CFO of NuUnion CU, Lansing, Mich., and chair of the CUNA CFO Council, wasn't the only CFO who suggested this route to keeping costs down.

"There are some firms out there that can help credit unions review their vendor relationships and contracts and test the waters for pricing improvements," he said, noting that his credit union is working with Strategic Resource Management out of Southbend, Ind.

2) Issue Requests For Proposals On A Regular Basis

A variation of the "review vendor contracts" theme, try issuing RFPs regularly, suggested Jay Scungio, vp-finance and CFO at Freedom CU, Springfield, Mass. "Do RFPs every three years with all your vendors with whom you do certain amount of business, say, contracts of $50,000 or more," he advised. "Be diligent about what you're paying and to whom you pay it. Let's say I've got a $300 bill for cutting the bushes, and I walk around the building and discover that we've only got seven bushes, well, should it really cost more than $40 a bush?"

3) Cooperation Isn't Just A Philosophy-It's A Way To Cut Costs

"I'd like to see credit unions get together to pool their resources to get economies of scale and power buying," Scungio offered.

4) Consider Trimming Your Branches

"One big thing we're doing is we are reviewing all of our branches and facilities that we lease, looking for efficiencies to make sure that our branch network is pulling its weight," said Peggy Lamb, CFO at Capital Community CU, Lansing, Mich. "We looking at the physical buildings themselves to see that they are bringing in the business we expect of them. We have already closed down one building and moved the operations from there to one of our larger facilities."

5) Outsource, Outsource, Outsource

"We outsource our ALM risk modeling," said MJ Koon, CFO at Ent FCU, Colorado Springs, Colo. "Credit unions spend an enormous amount of money to purchase an in-house model and then spend more money hiring someone to run them and interpret the results. After inheriting a costly in-house ALM model and having to hire and train several different people to use it, Koon turned to ALM First Financial Advisors, calling it "one of the best things I've done since I got here. In about 10 investment trades, we paid for two years of our flat fee for the program. Their purchasing power is so much bigger then we would ever have on Wall Street ourselves." For smaller credit unions, outsourcing is a particularly powerful cost-cutting strategy, she added. "They should be looking at HR and payroll and things of that nature."

6) Automation Is Your Friend

"There are so many things that can be automated that individually don't look like much time or money is saved, but it adds up," Lamb suggested. And you'd be surprised at where you can find more opportunities to automate-take the old Excel spreadsheet, for example, she said. "Take the time to really learn that one software program really well, and you'd be amazed at how much time and resources you can save-and reduce errors, too. Very few people use their software to the fullest."

7) Review Your Processes

Nearly every CFO the Credit Union Journal interviewed cited a review of processes in one form or another. Bob Warren, SVP and CFO at Virginia CU, Richmond, Va., noted "[One] potential area is process improvement that can result in fewer labor hours needed to accomplish tasks. This can help reduce the need to increase staffing as the credit union grows." Marvin Garland, COO and CFO at FCUL Service Group agreed, adding, "A lot of credit unions have old processes in place and then don't always review them to see if there are steps that can be cut out. Lending is a good example. Go over the application and approval process and create templates so you don't have to recreate things every time you need them."

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