6 effective tips to reduce operating costs in your company
Reducing operatingcosts can be a challenge for any company, regardless of size. However, it is worthwhile, as it is the best way to increase your profitability.
In practice, cost reduction brings a number of direct and indirect benefits. It is therefore imperative for the optimisation of your business to have strategies in place to achieve this.
There are many ways to reduce operating costs. However, since the focus of unnecessary expenses can be in several places, there is no single way. Business processes must be evaluated to find the causes.
To help you, here are 6 easy ways to cut costs that you can start implementing now.
1. Adjust the procurement of services
Services such as telephone, electricity, Internet or even office supplies are necessary expenses. However, it is common for us to fall into unnecessary or dispensable expenses.
For example, do you use a landline phone? This can be an unnecessary expense. Nowadays, mobile phones or even virtual phone lines are even more useful and help to reduce costs.
Do you really need the fastest Internet connection in the world? What do you use it for? Maybe you only send a couple of emails a day. If this is the case, you can save money by signing up for a more modest or limited internet service.
Similarly, the electricity bill is one of the factors that can significantly increase your company's operating costs. A good alternative is to establish usage rules. For example:
- Unplug unused electronic devices.
- Turn off lights in the office or unoccupied spaces.
- If possible, take advantage of sunlight.
- Replace light bulbs with energy-saving options such as LEDs.
- Check for leaks and change air conditioning filters.
2. Control "small" expenses
The so called "ant expenses" are some of the most damaging, and it is very common for us to fall into them. At the time of payment, these expenses seem small; but you will see that when you add them up at the end of the year, the number is much higher than you imagined.
The best way to control these expenses is to maintain good planning of the budget and monthly inputs. In this way, you will not have to resort to frequent small payments that will affect your finances.
3. Evaluate contracts with suppliers
By analysing supplier contracts you can see, for example, which suppliers have changed their terms and may no longer be a good fit for your company.
Similarly, you should look at the cost of each contract and compare that value with the services you use.
Sometimes companies buy products or services that end up being little used and can be withdrawn without causing internal damage. Before making a decision, you should review the terms of the contract in relation to the following:
- Practical values;
- Negotiated packages;
- Annual adjustment indicator.
- Interest rates.
If you identify less favourable contracts, try to negotiate better conditions. If the supplier won't budge, look for another supplier.
4. Subcontract
Some people reject this option because they do not want to pay for services, but delegating some tasks may even reduce costs. In general, external companies are properly qualified to perform them, which in the long run brings benefits in terms of investment.
In this context, an outsourcer will always be well trained and prepared to fulfil certain tasks. This saves you from having to invest in training your staff.
Thus, outsourcing can be much cheaper and simpler than maintaining a dedicated fixed team, especially if it will perform activities that do not have a significant impact on the company's productivity.
5. Stock management
Efficient inventory control is one of the most effective cost-cutting strategies in any business, regardless of industry or sector.
In fact, it is not recommended to keep stock in the warehouse for long periods of time; this means tied-up capital and also generates storage costs.
Poor inventory management can:
- Reduce working capital
- Delay payments to suppliers
- Miss good business opportunities due to lack of available capital.
- Causing damage to products, either through negligence, deterioration or loss, etc.
Remember that the higher the turnover, the higher the savings .
Make sure you have an effective inventory control process that allows you to sort products by expiry date. This will also allow you to calculate when and how much to buy of each item.
6. Have smart charging and payment modalities
The adoption of different payment methods and payment gateways is directly related to the reduction of operational costs. These tools are essential to optimise purchasing processes and provide a better customer experience.
But it's not just the payment methods that will save you money.
Through payment platforms, consumers can transact through the device of their choice. This reduces the paperwork involved in invoicing (and the costs of that paper, clearly).
PAGO46 helps you to reduce costs from your collection process.
The collection and invoicing process is one of the processes that requires the most control, management and supervision in the company. Clearly, this translates into expenditure and investment to maintain proper operation.
At this point, our payment platform not only helps to reduce handling and processing costs, but also increases sales.
How? Your customers can use the platform to make cash purchases online. This allows you to reach a larger population of shoppers.
In addition to this, PAGO46 provides your business with other benefits such as:
- Improve your sales: process transactions anytime and anywhere
- Easy to implement and integrate into your website, app, email, networks, etc. You can also receive payments without integration with just an API.
- Integrated payment button: you will receive real-time notifications.
PAGO46 is the fastest, easiest and safest cash payment network in Latin America -find out morehere!
Conclusion
No matter the size of your company, reducing costs should always be part of your business strategy, as it increases the profitability of your business.
The tips mentioned here can greatly reduce business costs and even improve your customers' experience.
So, in order to optimise the use of your financial resources, be sure to monitor your business expenses regularly to ensure accurate control. Also, keep on a constant quest to improve your processes and reduce your expenses.
If you don't know where to start, start by reviewing the collection process. At PAGO46 we offer you the ideal platform to reduce costs. Contact us.
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