Quick Wins: How to Reduce Business Costs
The full financial implications of the COVID-19 pandemic are yet to be seen. But it will inevitably take years for business and the economy to recover. As a result, most businesses are already looking for ways to reduce their costs and improve cashflow.
Are you a business owner, a Financial Director, or responsible for the purse strings in your business? Keep reading to find out how to reduce your business costs.
Better debt management
Our top tip here is to be proactive. Don’t wait around to find out if your customers are going to pay you. Get closer to the money for better cash management.
For this, your credit controller should be contacting your customers (particularly your larger customers who spend the most) as soon as your invoices land. Make sure they ask things like ‘have you received the invoice?’ ‘Is everything on track for us to be paid as per our agreed payment terms?’
The answers you get will improve your line of sight of what’s coming into your business. Further, you’ll be in a position to anticipate problems and act accordingly. Waiting until after the payment is due, doesn’t give you much time to deal with any issues.
Review office space
Working from home, for many, has recently become the ‘new normal’. Which might be something your business can choose to take advantage of.
How much is your office costing you to rent, run and maintain? Or, if you own the building outright, how much can it be sold for? If many of your employees can successfully work from home, perhaps you can look to reduce your office space? Downsize to somewhere smaller that’s cheaper to rent and maintain, and invite employees to use the space on a part-time, rostered basis. That way teams can still regularly meet face to face.
For this approach to work, you’ll need cloud-based technology. It’s no good if your systems are stuck on a server at the office and inaccessible from home!
Assess budget lines
What are your current and planned outgoings across the business? From HR, to Sales, Marketing and Operations – can any departmental expenses be reduced, or cut completely?
Think production costs, equipment, utilities, office supplies, catering, company vehicles, advertising, travel costs, entertainment, memberships and subscriptions, employee vouchers and prizes – it’s a long list for most businesses.
Speak to managers across the business to understand which outgoings can be reduced, cancelled or put on hold for a few months or until further notice. This is a quick and sure-fire way to reduce business costs.