Finance & AccountingFree
Cost Reduction Plan From Your Contracts
River reads the ledger and the paper behind it, so every cut carries the date it can start and the saving that lands before year end.
River reads the cost detail and the contracts underneath it, then builds the plan as a set of dated decisions rather than a wish list. Each candidate carries the notice its agreement demands, the earliest date it can take effect, what it costs to get out, the cash it saves before your year closes, and the run rate it saves after that. Those last two numbers are almost never the same, and confusing them is how a cost programme misses.
The constraint is not finding the money, it is the calendar. A staffing agreement releases on fourteen days and a maintenance contract on a hundred and eighty. A headcount reduction crossing the federal threshold cannot take effect until the end of a 60 day period after written notice is served. Every one of those dates is written down somewhere in your own filing cabinet, and none of them is in the general ledger.
Written for the CFO or finance director handed a number and a deadline by somebody else, with the paper for both sitting in four different systems. The reforecast it produces flows into the board slide and variance commentary. The cash effect lands week by week in the 13 week cash forecast, and where the programme exists to protect a ratio the result gets tested in the covenant headroom forecast. Every question it will draw comes out of the board question prep brief.
Run rate is not cash, and the gap is the notice period
Take a target of four million annualised with two point four of it wanted inside four and a half months. The candidate list gets to four million in an afternoon. Read the paper and a third of it cannot start until the next renewal window, a fifth needs six months of notice, and the largest line is a lease with no break clause until 2028. Four point two million of run rate is genuinely there. One point one million of it lands this year, and no amount of pressure changes the arithmetic.
Timing rules do not only delay a cut, they change its shape. Employment losses at one site in separate groups, each below the statutory minimum, aggregate across any 90 day period unless the employer shows separate and distinct causes. Cut forty four roles and the nine you cut in April come with them, the total clears the threshold of fifty employees and a third of the site, and the date moves out. Cut forty and it does not.
Then there is what each cut costs you that never appears as a cost. Dropping the northern linehaul saves 1,260,000 and adds a day of transit for four accounts worth 6,800,000 of revenue, two of which renew next quarter. Halving agency labour saves 890,000 and puts back 180,000 of overtime. Every line in the plan carries the thing it degrades, in the operator's own words, so the person approving it is approving both halves.
How it works
Add the ledger
Twelve months of cost detail by account, plus the headcount list with fully loaded cost.
Add the contracts
The agreements behind the biggest lines, since their notice clauses set the whole calendar.
River builds the plan
Every candidate dated from its own contract, priced two ways, and tested against what it breaks.
Decide and sequence
Approve the set, and the notices that have to go out this week come out first.
What you get
- Notice period, renewal window and exit cost pulled from each contract, not from memory
- One-time and run-rate savings separated, with the in-year cash on every line
- The earliest date each cut can lawfully and contractually take effect, from the paper
- Headcount timing tested against the aggregation rule before a date is chosen
- What each cut degrades, named specifically, with the revenue or service exposed
- A reversibility rating, so the ones you can undo are separated from the ones you cannot
Common questions
Why separate in-year cash from run-rate savings?
Because a board almost always wants both and the two numbers can differ by three times. A cut effective in November delivers its full annual value from next year and nothing this one. Reporting a single figure hides which of the two you actually delivered, and September is a bad time to find out.
What does it need from the contracts?
The agreements themselves, however they are stored. It reads for the term, the renewal mechanism and its window, the notice required, any minimum volume or spend commitment, termination fees, and reinstatement obligations on property. Those clauses set every date in the plan, and they are the part nobody has to hand when the target arrives.
Does it handle headcount decisions?
It sizes them, dates them and tests the timing, including how separate reductions at one site aggregate and what that does to the earliest effective date. It also prices severance, notice pay and the overtime that comes back. The decision about who stays is yours. Hiring in the other direction is priced by the headcount plan, in fully loaded cost rather than salary.
How does it know what a cut breaks?
Partly from the data, since a contract tells you what service it buys and the ledger tells you what volume runs through it. Mostly it asks you, because the operator knows. What comes back is written in operational terms rather than financial ones, so the approver understands what they are agreeing to.
What if the target is genuinely not reachable in the time?
Then the plan says so with the arithmetic behind it, names the gap, and gives the options that close it: a one-time item, a deferral, a date change, or a smaller number. A deferred purchase gets priced through the capex request. That is a far better paper to hand over than one that reaches the target on assumptions nobody wrote down.
Can I run it again once decisions start landing?
Yes, and the second pass is usually where the value is. Notices get served, dates firm up, some cuts land differently than modelled. The plan tracks committed against delivered and reforecasts the rest, which is the same discipline the budget versus actual review applies to everything else. Whether the miss that prompted the plan warranted a reforecast is a separate test, worth running first.
Cost Reduction Plan From Your Contracts
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