Increasing your profits requires selling more and/or spending less. While building up your sales may require an extended effort — especially given the current economic climate — business costs are often very ripe for a quick trimming. Here are some possibilities to consider to help maintain profitability:
Supplies and other purchases
In any business, there are relatively few items that represent a large share of all outlays. The first step in cutting expenses is, therefore, to identify your highest costs. You may be able to trim many of these costs by ensuring you always bid out significant purchases or by more actively seeking less expensive alternatives. For many companies, inventory carrying costs are a huge expense. Focusing on matching your inventory quantities more closely to your short-term needs could result in significant savings.
Telecommunications and similar services
The ongoing services you buy may also offer the potential for cost savings. Revisit your choice of telecommunications vendor and your usage, and look carefully at your costs for financial services. If you borrow or maintain a line of credit, always compare the rates from more than one financing source before you commit. Make sure you’re not paying higher-than-necessary fees for your company’s checking and deposit services.
To control cash outlays, take advantage of discounts for early payment whenever possible. And look to delay payments for as long as you can without giving up discounts. On the receiving side, deposit receipts daily, and always actively pursue collection of any invoices that are past due. To help control your working capital needs and, therefore, your credit costs, try to match any new liabilities to your anticipated cash flow.
One other category worth examining is fixed expenses that are long-term commitments. While you usually can’t change these quickly, be aware of when a window for change will open and prepare well in advance by considering lower cost alternatives
Feel free to give us a call at (973) 301-2300 to learn more ways to control your spending.