Need to keep your spending down? The accounting gurus at Drumm Nevatt & Associates (“DNA”) encourage you to review your current expenses, identify the expenses you can reduce, and consider implementing an aggressive expense management program to reduce your expenses even further.
There is no shortage of costs in running a business. Overheads, supplier bills and other expenses seem to come out of nowhere if you take your eye off the ball for even a second. These costs gradually eat away at your cash position, making it difficult to grow and profit.
What can you do to reduce these high spending levels? And how does this affect your overall margins, revenue, and ability to fund the next phase of your business journey? How can you reduce your outflow of cash? Get proactive with spending management.
“Spend management is about taking control of your expenses and aiming to reduce the costs and overheads of your business. Why is this important? Because overspending eats up your cash flow, reduces your profit margin, and prevents you from making the profits you worked hard for” – Craig Nevatt, Drumm Nevatt and Associates.
Therefore, being proactive in managing expenses can make your business much more economical and efficient. This is great for the health of the business.
So, what can you do to reduce costs? Here are our top 5 recommendations:
Reduction of Expenses – Expenses are the inevitable costs of running a business, manufacturing a product, or providing a service. If you have a brick-and-mortar building, these overheads include rent payments, utilities, and even staff payments. Look at the numbers to see where you can reduce those overheads.
Labour Cost Limits – If employees can charge for expenses or use company money to purchase materials and equipment, we recommend you set a spending limit so each employee can only spend up to the agreed amount. Having a clear spending policy is just as helpful as training your staff on good spending management techniques.
Find a Cheaper Supplier – Reducing Supplier Costs will greatly help reduce overall spending. If you’ve been working with a particular supplier for years, look for new offers and research current market prices to see if you can negotiate a better deal.
Make your Operations Leaner – The higher the operating costs, the less profit you will make from the final product or service. One way to solve this is to take a “lean approach” to minimize personnel, resource, and operational complexity. By keeping your business as lean as possible while maintaining the same performance, you can reduce costs that affect the cost of sales (COGS) while stabilizing revenue.
Tax Relief – Tax costs may seem inevitable in running a business, but it’s worth investigating which tax deductions, grants, or other business benefits are available.
Get in touch with the team at DNA for professional business guidance and make your cash flow more efficient for future success.
Contact Phillip Quay
Phone: 0274 587 724