Reducing Business Costs – Advice From An Expert

One of the primary reasons for businesses going bankrupt is that they are not good at controlling their finances. As costs are not properly controlled, cash flow inevitably suffers and, without enough money in the bank, the business soon fails. Therefore, it’s no surprise, especially in the current economic climate, that lots of organizations are looking for practical ways that they can reduce their expenditure. There are a number ways to do that, with these being a good place to start:

Utilities – Many businesses miss out on large savings by sticking with their current natural gas and electricity suppliers without ever comparing. It’s rather simple and using a broker will provide a broader range of tariffs. Take note of when your contract ends with a current supplier because many offer only a short amount of time in which to cancel before locking you in for another long-term deal.

Outsourcing – Outsourcing non-critical business functions can result in substantial savings. Finance, IT and HR are the main areas that you can probably save on. Depending on your industry though, you also want to consider outsourcing customer service, distribution or marketing. Outsourcing overseas, such as to India or the Philippines, should not be dismissed.

Banking – It may sound obvious, but some businesses fail to review their bank charges. These are usually variable charges that banks can use to gain profit from your business dealings. Some things to look for are interest rates and if any accounts are received in credit. It may also benefit your business to pay for a higher monthly fee for a higher level of online services as it may be cheaper than the usual transactional fees.

Business Rates – Rates change over time and they can be challenged every five years. If you feel comfortable, you can challenge them yourself or you can hire a consultant. When using a consultant, however, be sure that you are not charged up front and that the charges are based only on savings to your account. The biggest mistake is to assume your business rates don’t change.

Telecoms – Businesses have plenty of competition since the deregulation of the telecom market, and those with large providers can save up to 10% off line rental. Even more can be saved on call charges. It is important to compare rates and be sure that the contract length is suitable to your needs.

Office Stationery – Combining suppliers and invoices not only enables savings by purchasing from one place, it also increases your ability to negotiate. This ability increases if you are part of a buying group. By monitoring your own usage and limiting the number of authorized reordering personnel, you can reduce costs. Using your own products can lead to 25% savings.

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