Most cost reduction conversations in growing companies go to the same place immediately: headcount. If margins are under pressure or cash is tight, the first instinct is to look at the payroll line. It is the largest single cost, it is visible, and cutting it produces an immediate and measurable result.
That instinct is not always wrong. But it is almost always premature. Before touching headcount, any competent controller should run a systematic review of the cost base looking for the spending that should not be there at all: the subscriptions nobody cancelled, the vendor terms that have not been renegotiated in three years, the overhead that scaled up during a good year and never scaled back down.
In most mid-size companies with CHF 3M to CHF 15M of operating expense, this kind of review surfaces between CHF 80K and CHF 300K of costs that can be eliminated or significantly reduced with minimal operational impact. This article walks through where to look and what questions to ask.
The Five Categories Worth Examining First
1. Software subscriptions and SaaS licences
This is consistently the most productive starting point in the review and the one where most companies are most surprised by what they find.
Software purchases in growing companies accumulate faster than they get reviewed. A startup buys a project management tool for three people. Two years later, the tool has forty licences but fifteen active users. The other twenty-five are paying for accounts belonging to people who changed roles, left the company, or simply stopped using the tool after the first month. At CHF 30 to CHF 100 per user per month depending on the software, the cost of thirty orphaned licences across three or four platforms adds up quickly.
Run the exercise: list every software subscription the company pays for, the number of licences, the cost per licence, and the actual active users in the last 30 days. Most SaaS platforms show usage data in their admin console. Compare licences to active users. Cancel or downgrade licences for anyone who has not logged in the past month.
The second question is whether multiple tools are doing overlapping jobs. Companies that grew through a startup phase often have three different project management tools, two different video conferencing platforms, and four different communication apps, each introduced by a different team at a different time with nobody reviewing the overall landscape. Consolidating to a single tool in each category and cancelling the rest is both a cost saving and an operational improvement.
2. External services and professional fees
The second most productive category is external services: consulting, legal, marketing agencies, IT support, HR consulting, and similar engagements.
These engagements often begin with a specific, time-limited scope and then continue on a rolling basis beyond their original purpose. A legal retainer arranged for a specific contract negotiation continues for three years because nobody reviewed whether the ongoing retainer was generating value proportionate to its cost. A marketing agency relationship established for a product launch continues to run monthly campaigns on a scope that has never been re-evaluated.
The review question for every external services engagement: what is the scope of this engagement today, what value is it producing that could be measured or assessed, and is the current cost proportionate to that value? For engagements where the scope is unclear or the value is difficult to articulate, that is a conversation that should have happened earlier and should happen now.
3. Vendor terms on major cost categories
Outside of payroll and rent, most companies have two or three vendors that represent large proportions of their cost base: a primary supplier, a logistics partner, an IT infrastructure provider, a cleaning or facility services contractor. These relationships often settle into a comfortable pattern where the price negotiation happened at the beginning and has not been revisited since.
Prices on most services increase annually by small amounts that individually feel too small to contest but compound significantly over three to five years. A logistics contract that was priced in 2021 and has had a two percent annual escalation applied without a market review is now priced five to ten percent above what a new contract with a competitive tender would produce.
The practical approach: identify the five largest non-payroll, non-rent cost lines. For each one, answer two questions: when was the pricing last negotiated competitively, and has the scope of service changed since the original contract was signed? If the answer to the first is more than two years ago, a market check is warranted. If the scope has reduced while the cost has stayed flat, there is an obvious conversation to have.
4. Misallocated overhead
A subtler source of hidden cost is not spending that should be eliminated but spending that is being charged to the wrong place, obscuring the true cost structure of the business.
Overhead costs that are allocated based on outdated allocation keys produce distorted cost centre P&Ls. If IT costs are allocated based on headcount but certain departments use IT infrastructure far more intensively than their headcount suggests, the high-usage departments are being undercharged and the low-usage ones are being overcharged. The total cost does not change, but the management decision that results from the distorted view may be wrong.
The review question: when were the allocation methodologies for shared costs last reviewed, and are they still reflective of actual consumption? For companies where cost centre reporting drives meaningful management decisions, this is worth a quarterly review of the allocation logic.
5. Discretionary spend that was approved in a better year
A final category that often surprises management when made visible: discretionary spending approved during a period when margins were strong that has continued on autopilot through leaner periods.
Travel and accommodation budgets set in pre-pandemic years and never reduced. Conference and training budgets that were generous when the business was growing fast. Team events and off-sites approved when cash was plentiful. Vehicle allowances for roles that no longer require extensive travel.
None of these are wrong in principle. All of them should be reviewed explicitly against the current financial position and the forward outlook. A business that is tightening its cash position but has not reviewed its discretionary spend line is missing a straightforward lever.
How to Run the Review
A structured cost review takes approximately two to three weeks for a mid-size company. It requires access to the detailed cost ledger by vendor and category for the last 12 months, the contracts for major supplier relationships, and the software licence data.
The output should be a prioritised list of opportunities, each with an estimated annual saving, the action required to capture it, and an assessment of the operational risk. Not every saving is worth capturing: a vendor relationship that produces modest savings through renegotiation but damages a relationship that affects quality or delivery is not a straightforward win.
Presenting the findings with this level of specificity allows management to make real decisions rather than vague commitments. The question is not whether to cut costs in general. It is which specific actions to take, in what sequence, and what each one is worth.
The controller who runs this analysis and presents it with that level of precision is doing exactly what a competent CFO function does: providing the information that enables good decisions, without pretending that the decision itself is a financial one.
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Alessandro Ratzenberger is a fractional CFO and business controller based in Zurich, with 15 years of operational finance experience at Dufry Group and Bomi (UPS Group).
