Cutting Costs: Big Savings for Small Businesses

Published 31st March 2017

Is your business facing cash flow problems?

Are you looking for ways to bring down your operational costs?

Here are 4 tips to help you get there:

Track Your Inventory

Stocking inventory ( more than is actually needed) is a common mistake almost all small businesses make. Hoarding inventory ties up your working capital in addition to increasing your storage and holding costs.   The results of this? Cash flow crisis and an ever increasing amount of operational costs.

What do you do about it? Exercise the principles of Economic Order Quantity (EOQ) to minimize your inventory costs. Also, keep an eye on the slow moving and/or dead stock. It is often better to sell them off at discounted or scrap prices rather have them dumped in the warehouse for nothing. As they say: Something is better than nothing!

Think Green

Yes the environment needs your business to be friendly with it, but it’s your business that benefits more when you go green. Using recycled products, energy efficient lights and fixtures, and turning off all equipment at the end of the workday can save your business a lot of money in a year’s time. Also, try creating a paperless work environment. It will give the trees another day to live and help you streamline your cost-cutting process better.

Make the Most of Your Credit

Most small businesses use corporate credit cards for business transactions. This is where choosing the right type of business card can cut down major costs by a margin. For example if you have to travel frequently for your business, a corporate credit card that offers frequent flyer miles will save you airfare costs. Pick a credit card that offers reward points for cash back or discounts relevant to your business to save money.

Keep an Eye on the Accounts Receivables

If you allow credit sales, there’s a fair chance that a good amount of your working capital is tied up in unpaid invoices. This may lead to cash flow problems if you do not devise a system that helps you collect timely payments from customers against your outstanding invoices. The ideal situation would be not to offer credit sales, but if you do, you need to make sure you have a proper debt collection process that keeps the cash coming in. This will save you the need to apply for working capital credit or loans, which bring additional finance costs along with them.

Even if you choose only a couple of methods out of these, you can give a substantial money makeover to your small business. These tips can help you make your business more profitable and efficient in the long run.

For professional help with handling accounts and taxation, get in touch.

If you found this information useful, let us know! Feel free to share it so others can benefit too.

Click the video link below to meet Les Wells of AK Book-Keeping

Video of Les

 Email: les@akbook-keeping.co.uk

 

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