As a small business owner, you likely spend a lot of time figuring out how to boost your revenue. But you’re no doubt also focused on how to control expenses. Implementing a cost control strategy can be accomplished in several ways, like making timely payments, ensuring your customers pay on time, integrating software applications, installing a payment approval process that is electronic rather than paper-based, and keeping a good record system. Let’s focus on four ways businesses can control expenses.
Timeliness of Payments
One of the most important ways you can control your business expenses is by streamlining your accounting system. You (or your accounts payable or finance department, if you have one) should make sure your bills are always paid on time to prevent late fees. In fact, some retailers provide discounts for making timely payments – sometimes as much as 10 or 15 percent off.
You’ll also need to ensure your customers pay on time so that you avoid the opportunity cost of money that belongs to you but is sitting in someone else’s bank account. Devise a streamlined system for invoicing customers and collecting when they’re late.
One result of the IT explosion has been a merging of software applications, platforms, and other solutions to help businesses streamline their operations. We all know the adage: time is money. Less time spent managing employee processes equals more time to focus on developing your next revenue-boosting product line.
The hybrid cloud combines both public and private cloud IT resources to achieve maximum scalability while keeping all data secure. Another way to integrate software applications is to use an open application program interface (API), a programming tool that makes it possible for application programs to share data.
Electronic Approval and Payment Processes
Companies are moving away from paper-based payment systems, but the move hasn’t been quick enough. Seventy-one percent of all invoices are paper, while most of the approval process is still manual. Electronic payment systems can save companies both time and money – around 12 dollars per invoice – and cut the cycle time by a good 16 days.
Electronic approval systems fit within the same paradigm. Given increasing automation, companies may find it necessary to adopt methods of authorizing documents by providing electronic approvals. Digital signatures are becoming a mainstay in the business world.
Keeping good records is necessary to maintain a strong sense of organization. You need, for instance, good records for financial and tax reasons. You’ll want to keep track of all your customers and plans for your company’s future. If you have inventory, record-keeping can help you determine how much to keep in stock at any given time. Keeping too many items in stock can cost your company money.
And don’t forget about legal compliance. You’ll need a robust record-keeping system to make sure you – and others – are following the terms in your contracts, leases, and other legal agreements.
For more information on how to control your company’s expenses, please contact us.