Reviewed: 2nd December 2016
A topic that’s high on the agenda for most businesses, money-saving leads to increased working capital and greater flexibility of operations. Although switching suppliers is an obvious place to start for directors looking to boost cash flow, there are lots of other ways to cut costs which add up to considerable savings overall.
To gain a better understanding of where the money is spent, it’s a good idea to review your expenses over the period of a year - you’ll be able to identify areas where spending has been excessive, and take the necessary action.
Heating and lighting can be a considerable expense if you don’t take advantage of the ever-increasing eco-friendly options now available. Energy-saving compact fluorescent light bulbs and LEDs do require an initial outlay, but can save huge amounts on your lighting costs over a year.
Being able to isolate radiators and lighting to only the office areas in use will also reduce your energy consumption, and lower bills. You could encourage or incentivise staff to be more aware of their energy use at work – simply by asking them to shut down computers at night and when not in use during the day, you’ll make considerable savings.
Rather than purchasing printer paper and stationery from the usual high street outlets, consider buying the most-used items, such as ink cartridges, paper and envelopes, in bulk. If you have the storage space you can make huge savings – look online or locally for bulk warehouses offering wholesale deals.
By joining a trade association or teaming up with other local businesses, you can also open the door to bigger discounts on bulk purchases. As a group, you’ll have greater negotiating power for better payment terms and discounts on delivery.
If you issue high volumes of invoices, you can save on credit control costs by using specialist debt collection solicitors. For a small sum they’ll issue letters before action on your behalf, which can be both cost-effective and time-efficient as it keeps your focus on sales rather than chasing non-payment.
Late payment of invoices is a huge problem for many businesses, and consumes time that could be spent on growth and development. If you outsource your credit control function to a reliable provider, you’ll relieve the constant pressure to collect payments and be able to focus on growth.
Your business may be eligible for the Annual Investment Allowance, and capital allowances. Some low emission cars, energy and water saving equipment, and zero emission goods vehicles also attract ‘enhanced capital allowances.’ In addition, if you pay corporation tax, you could qualify for Research and Development Relief.
Outsourcing to self-employed contractors and freelancers lowers the costs of employment, and offers a flexible way to increase efficiency. You can fill a temporary skills gap or use contractors on a regular basis as you don’t normally have to pay employer tax and National Insurance.
The number of full-time employees that are needed reduces, and you take advantage of a skilled workforce without the associated high cost. Outsourcing your finance function could help to avoid penalties for late filing or payment, and will ensure compliance with HMRC requirements.
With so many low-cost digital marketing options available, you can market your business to a wide audience as well as reaching your local customers. Rather than paying for traditional advertising, Facebook, YouTube, SEO and email marketing are all inexpensive but efficient alternative ways to spread the word.
By creating a ‘marketing partnership’ with a business that complements yours, you’ll have access to combined funds for longer-term advertising and promotion. If you do have printed material, including flyers and brochures with other customer communication reduces the cost of mailings.
Rather than spending money on expensive in-house software, cloud-based options offer easy access to word processing, spreadsheet, database and accounting programmes, with a pay-as-you-go system that’s cost-effective. Cloud storage also allows you to access files securely from your mobile devices, so you can work efficiently whilst travelling.
Avoid having to rent expensive office space if you can by working virtually from home, or use the growing number of co-working spaces now available in the UK. They’re a flexible option, particularly if you travel a lot for work, and you’ll instantly cut your operational costs.
Meetings are often a significant hidden cost - they reduce productivity and can be a serious time-drain without offering particular benefits to the business. Save money by minimising the number of people involved, preparing a specific agenda with points for discussion, and limiting the time spent in meetings.
Scrutinise your purchasing procedures so that stock is always at the minimal level without causing an issue in order fulfilment. By holding too much inventory you’re using up valuable working capital, which can prevent long-term growth and development.
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