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The Financial Mentor with David Boyar: Lifting the lid on business

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10 ways to cut costs

by David Boyar |

Internal Operations, Expenses, Costs

1 Comment
June 12 , 2018

Recently, Taxify announced they were coming to Australia to compete with Uber, because Uber’s costs were too high and they were passing on. It’s crazy to think that a new innovative company like Uber could have bloated costs but if they do, surely you do to?

In this post, our Financial Mentors show you how to cut expenses.

1. Sense Check - Do I really need this?

Gadgets, new software, swag, all business expenses that are fun to have but aren't always needed to drive value to your business. This is such a simple question, but before you get out your phone to swipe at the till, ask yourself, Do I really need this?

2. Review your aged payables report

Ask these simple questions

- Are invoices entered twice?
- Are invoices listed that I think I have paid?
- Are invoices showing you think you declined?

3. Change your negotiation style - don't let suppliers dictate to you

Odds are your suppliers want your business, yet so often we accept their terms. We accept their price, their payment terms, their features and benefits. everything in business is a negotiation, so make sure your suppliers aren't pushing you around. Your costs, are their profits.
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4. Review your debt

So many businesses have debt but with record low interest rates at the moment and you shouldn’t be paying what you did when you took out the loan.

1. Find a great broker to help refinance your debt
2. If the property securing your business debt has gone up in value, considering restructuring your loans
3. If you have loans from fintech suppliers make sure you know the full cost of the loan
5. Pay Suppliers on Time

Many suppliers will give you a discount if you pay on time. Have you asked? Do you pay on time? If so, do you ask for a discount?

6. Prepare budgets and find a financial mentor to hold you accountable to them

Every department in your business should have a budget so they know what they are authorised to spend. But let’s be honest, so often we prepare budgets that get put in the proverbial bottom drawer and are never looked at.

7.Supplier shop!

When was the last time you actually took your business to the market to see what things cost? Major expenses like insurance , petrol, bank fees, merchant fees, stationery, internet and mobile phones can get out of hand. Set up a process to take your business to the market and see how much you can save.
Drop slow moving stock and product lines

What you scream? My stock isn’t an overhead! Maybe not, but it does reduce your profit if you hold it for too long. Draw up a list of how long it takes for each item of stock to get sold (this sounds tedious, but a good stock system like dear inventory can save a lot of time here, check this link on how to measure your stock days)

8.Have an accounts payable process

How many things happen in your business that takes time and doesn’t add value. Accounts Payable is one of those things. Paper invoices get handled, 2,3, even 4 times before it’s even paid! What a waste of time. So start with this process, review, it and look for ways that stop the chances of invoices that are more than what has been ordered or approved being paid.

9.Wages are a huge expense, review them

Ok, this sounds like a big task, but given how big of an expense wages are it’s worth the exercise. Some great questions to ask here are. For some non-core tasks, you might want to consider outsourcing. Here is a great post from Quickbooks on how to control payroll costs.

10. Review SAAS expenses

This is a new problem for business. How many times have we just given our credit number online to try a piece of software that we end up barely using but getting charged for?

Make sure all SAAS subscriptions are coded to a control account in your P&L so you can easily review them and cancel what isn’t being used or lower your subscription level if you aren’t using all the features.

If you want more information on how our financial mentors can help you cut costs click below.

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The Financial Mentor with David Boyar: Lifting the lid on business