Every dollar you save is a dollar you don’t have to make.
That gem of wisdom comes courtesy not of a CPA or financial planner, but from my best friend’s grandfather. That doesn’t make it any less true, though, especially in this tough economy. Growing revenue is key to the long-term health of any business, but cost reductions can provide a meaningful boost to the bottom line relatively quickly.
Cutting costs doesn’t necessarily have to involve painful choices, but it does require that your company show a little creativity and resourcefulness. Here are seven ideas to get the ball rolling.
1. Consider Leasing Equipment
Leasing, instead of buying equipment, can be an attractive option for companies that don’t want to tie up too much capital at one time. As most leases don’t require down payments, a business can obtain the capabilities it needs without substantially altering cash flow. Leases are also appropriate in cases where equipment must be upgraded on a regular basis. You may also be able to deduct lease payments as a business expense. Check with your tax advisor.
2. Buy with Partners
Take the “Groupon” mentality to the office. Buying in volume through an office supply store or wholesale club is a no-brainer, but you can save even more by taking discount-hunting to the next level. New, smaller businesses often pay more than their more established counterparts for everything from information technology to payroll processing to benefits administration. Look online for a “Group Purchasing Organization” that can help your company enjoy the same benefits of volume and scalability as larger firms. You can even form your own buying alliance with other businesses or a local trade association to secure volume discounts.
3. Meet and Present Online
It’s not appropriate for every company or every account, but you can often cut travel and administrative expenses associated with sales and customer service by going to the Web. Inexpensive, Internet-based technologies make web conferencing and interaction easy and convenient. Packages like Microsoft Office Live Meeting allow you to make sophisticated presentations online.
4. Manage Cash Flow and Time Your Payments
Ask suppliers about possible discounts for early payments. Even a couple of percentage points from a few vendors over a year can bring huge savings. If they don’t discount, it makes sense to pay your obligations – even tax bills – as late as possible.
5. Always Get Three Bids
On everything. Sounds like more grandfatherly advice, but it works.
6. Evaluate Your Phone Service
There are too many good, cost-saving options to ignore. Voice over IP (VoIP) is a type of phone service that uses the Internet. Some small businesses are able to save 60% over conventional phone service costs. Because of the ease of use and reduced costs, VoIP installations are making traditional copper wire systems very uncompetitive. And while you’re at it, consider the benefits of bundled services. Buying phone service, cable, Internet, fax, and web hosting from one provider should save your company hundreds of each year.
7. Use Invoice Factoring
An invoice factoring service can reduce your costs associated with accounts receivables, collections, and even expenses associated with cash flow problems, like late payments and NSF charges.
MP Star Financial’s invoice factoring services can make your company’s cash flow more predictable, allowing you time to run your business and grow your company.
Call MP Star Financial for more information at (800) 833-3765, extension 150.