Business Owners: Have You Tried These Money-Saving Hacks?
“Beware of little expenses; a small leak will sink a great ship.” (Benjamin Franklin)
When a company is struggling with cashflow, or simply looking to improve profitability, the directors will often consider making grand sweeping changes like retrenching staff, slashing the marketing budget or even selling off resources. While this kind of kneejerk reaction can provide instant gratification, it may not be the solution to your long-term struggles. Cutting back on marketing might impact future sales, for example, and end up making things even worse.
That’s why it’s often a good idea to eliminate small expenses and wasteful expenditures, when you’re looking to streamline cash flow. Here are five simple ways to save money that you may not have considered.
- Beware bank charges
How did your company open its first bank account? Why did you choose that particular bank? If you haven’t thought about these things in a while, now’s a good time to start. The first step would be comparing bank charges – how much are you being charged to transact, and could you be paying less? Your accountant can help you to break down your company’s needs and find the best solution. Do you need to transact every day, or can you save money by paying off your creditors in scheduled payment runs? Would bundled services work better than transacting at will? How many credit cards do you need? Do you use overdraft facilities? The bottom line: stop paying for services you don’t need.
- Trim the tech costs
Technology is essential for running a business, but do you need (or even use) everything you currently have? Costs such as software subscriptions, fibre lines and cell phone contracts should all be looked at closely. Do you need a 200Mb/s download or will a 50Mb/s work just as well? Which of your employees really uses their company phones to generate profit? Small businesses will even benefit from looking at their software licences. Many popular work solutions have free, open-source counterparts that work very well and don’t require a monthly payment. Even if you decide you do need to pay for licences, you might be able to cut down on the number of licences.
- Exercise office efficiency
Monthly utilities may seem like something you can’t go without, but it might be wise to reconsider. Have a look at your work arrangement. Could you operate a shared desk situation for hybrid workers? Have you considered installing flow restriction nozzles on bathroom taps, and LED bulbs in the light fittings? Reducing the size of your office space and then maximising the savings attained on the utilities can save thousands each month – money that could be spent on attracting new clients.
- Commit to your favourite vendors
In business, commitment can be a cost-saving. If you have regular suppliers you’re happy with, why not speak to them about longer-term arrangements for cheaper monthly charges? Small business owners are particularly guilty of accepting supplier prices without considering the various ways these can be negotiated. Some of your suppliers might place great value on a one-year contract as opposed to a month-by-month one. Or they may be prepared to throw in free services in exchange for your guaranteed monthly spend. Ask your accountant to take a look at your current supplier arrangements and suggest alternatives and/or ways to reduce costs. It could have a significant impact.
- Adjust your payment and collection terms
Most big companies have their invoice payment and collection systems down to a fine art – but smaller businesses may not even think about them. Making sure that your creditors settle their invoices long before you need to make payments yourself allows you to benefit from the interest of having money in your account. It also ensures you never have to pay fines for missed payments or become overdrawn. As your accountants, we can help to streamline your payment and collection terms, and potentially achieve some significant savings.
The bottom line
Making cost savings doesn’t need to mean losing clients, products or expertise. And the hacks above are just the tip of the iceberg – there are loads of other small ways to save money. Speak to us about taking the small steps to greater profitability.
Your Tax Deadlines for September 2024
- 06 September – Monthly Pay-As-You-Earn (PAYE) submissions and payments
- 16 September – Start of Filing Season 2024: Trusts
- 25 September – Value Added Tax (VAT) manual submissions and payments
- 27 September – Excise duty payments
- 30 September – VAT electronic submissions and payments, Corporate Income Tax Provisional Tax payments where applicable, and Personal Income Tax Top-up Provisional Tax payments.
5 Top Tips for Managing Debt in Your Startup
“There are no shortcuts when it comes to getting out of debt.” (Dave Ramsey, finance journalist and author)
Most businesses have debt of some kind or another. Whether you need help to buy stock, maintain equipment or even fund a property, it’s likely that at some stage in your business’ life you will need to take out loans. The challenge comes in balancing the needs of your business with the debt you’ve taken on in a way that ensures growth. Here are our five tips for managing debt in your startup.
- Understand your debt
In order to successfully manage debt, you first need to fully understand it. As your accountants, we can help you create a complete spreadsheet of your debts detailing everything from the amounts owed, to interest rates, repayment schedules, and even penalties that may be triggered by late payments. This information will be critical for making the right choices.
- N is for negotiate
Provided you have a good relationship with your lenders, your next step should be to try to renegotiate all your loans. Asking for lower interest rates, extended repayment terms or consolidation of debts could make the whole process of debt repayment simpler.
- Not all debts are created equal
With your debts now in their healthiest place, it’s important to recognise that some debts are more important than others and thus need to be paid off first. Generally, you should aim to pay off high-interest loans first as these will cost you the most in the long run. Next you need to cover any debts which are secured by collateral – this will stop you from losing your assets in the future. Tax debts should also be prioritised as these can come with severe penalties and even criminal prosecution.Sometimes the choices are not immediately obvious, so don’t be afraid to ask us for a debt repayment schedule which factors in your business’ operating conditions, cashflow and ultimate goals.
- Improve cash flow
If you want to make sure your debt never becomes a problem, it’s vital that you improve the cash flow in your business to the point where you can meet your obligations. This can happen either through increasing sales, decreasing costs, or optimising operations – or from a combination of all three. For example, any money you can save on unnecessary expenses can go towards repaying your debt, lowering your interest payments and ultimately increasing the likelihood of success. It’s therefore essential that you work with us, your accountants, to optimise your inventory, cut costs, improve sales opportunities and chase your debtors and invoices to ensure prompt payment.
- Monitor your debt carefully
Your repayment schedule should not be set in stone. It needs to be reviewed and adjusted regularly to account for any changes in your business condition. The goal here is not to be entirely free of debt, but rather to leverage debt for improved business growth. Managing debt is an ongoing process that could very likely last for the entire lifespan of your company.
The bottom line
Debt can be the leg-up your business needs – or the lead weight that holds it back.
