Businesses may go bankrupt due to several factors, but one of the biggest reasons is the failure to control their finances. It goes without saying that without enough money in the bank, a business cannot survive and cash flow problems brought on by poor cost control are one of the fastest ways that a business goes under. Organizations are continually looking for methods by which to lower costs, especially in these tough economic times. Any business can attempt short term recovery methods to get back on their feet or to maintain operations by attempting the following practices:
Utilities – Too many companies never compare their gas and electricity providers. This means missing out on potentially huge savings. Don’t think that it will be a pain and time consuming to change over, because it really it isn’t. You should go through a broker as they have access to a wider range of tariffs than you would otherwise be able to access.
Outsourcing – Non-critical functions such as IT, HR, and finance can be outsourced, resulting in significant savings. Certain industries may also look to outsource manufacturing, distribution, or customer service to places such as India or the Philippines to heighten savings.
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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