In the CCH survey of small/medium enterprises a couple of years ago, management of costs was identified as the biggest single issue confronting small/medium enterprises.
Businesses need to be continually reviewing costs and the business expenses to see where savings can be made. A dollar saved in expenses goes directly to bottom line profitability. Many businesses have found that, by embarking on a strict cost control review, they’ve achieved the same profitability improvement that would otherwise have to come from a substantial increase in sales, which might not have been available to the business at that time.
Some ways that a lower cost can be achieved include:
Asking three firms to quote for the supply of a product or service and, subject to quality being OK, select the lowest quote.
Negotiating prompt payment discounts from suppliers.
Negotiating for a “package” of additional services that you can usefully utilise for your business.
Appoint a cost consultant to review utility costs such as water, electricity, gas and telephones.
Implement a travel policy if appropriate (airlines, accommodation, meals).
Appoint an insurance broker to review all insurance policies, including travel insurance.
Check bank statements for bank fees, interest charges, etc.
Have a discussion with your landlord if business conditions are very tough and see if you can negotiate a rent decrease or a rent increase deferral.
Ensure that payments have been made to your credit cards by the due date, to ensure that interest is not being charged.
Check supplier’s tax invoices to ensure that there has been no over charging and that all goods and services have been received.
Review stationery purchases. Are all purchases necessary for the business?
If you would like us to assist you with the review of the management of costs in your business, please don’t hesitate to contact us.