Just how you can manage to bring down certain business costs is something that might be playing on your mind if you are currently toiling to get expenditure, profitability and the overall financial performance of your business back on an even keel, following the worst of the pandemic.
We know that many small and medium-sized enterprises (SMEs) were severely impacted and now, those that have stayed afloat, face higher inflation, skills shortages and rising wages – new challenges that are, once again, impossible to avoid.
The Bank of England says inflation could hit four per cent by December, so being somewhat ‘cost-sensitive’ as we inch forward could help thousands of UK-based firms to get through these testing times.
Of the options available, where bringing costs down and spending more prudently is concerned, the following are perhaps some of the simplest to put into practice.
Review your suppliers
Are there cost savings to be made within your supply chain, or in respect of the services your business utilises – for example, IT and communications? Did you set these things up in a hurry when you first established your business, rather than looking for the best deal?
It’s sensible to review any contracts you have in place regularly to ensure that the terms continue to be appropriate for both parties involved.
Revisiting existing arrangements is not always about leaving your current supplier or cutting costs, however; it can also help you to maintain a good rapport with them and give you both a chance to talk openly about your respective requirements as they evolve, or are impacted by something as unexpected as the pandemic.
Sometimes, you need to spend a little to save a lot – even if we are talking about reducing costs within your business.
If you are reliant on older systems or software to run your business, it may make sense to invest in upgrading these now. The efficiencies that many of the moment digital tools and cloud accounting platforms bring will leave you with a business that is more responsive, flexible and futureproofed.
An example of this is digital invoicing and bill payments. This alone could help you to reduce administration costs and postage, while also eliminating piles of paperwork – saving you time and money.
Assess your workspaces
If you have a commercial business premises, it’s worth considering whether these are still meeting the needs of your business as it operates now. The space that you require may have changed drastically in the past year, especially if many of your staff have transitioned to hybrid or remote working.
The potential is that you could identify a cheaper alternative or, if you have moved entirely to remote working, you may wish to do away with business premises altogether.
Quite often, refurbished equipment can perform just as well as new and, simultaneously, allows for considerable savings to be made.
This isn’t just true of office furniture, such as desks, chairs and storage solutions. Properly refurbished computer equipment and copiers, for example, can also help you to keep your costs down.
Be aware, however, some capital allowance tax schemes do not allow for claims to be made on second-hand machinery or equipment. Before parting with any money in exchange for equipment or machinery to be used within the business, it is worth seeking advice from your accountant.
Speak to an accountant
Engaging our team of chartered accountants and business advisers could make your efforts to cut costs considerably easier.
Armed with an understanding of your business and its finances, we can work with you to generate a detailed analysis of the day-to-day running costs of your business and help you to recognise cost-saving opportunities that you may be missing.
We can also advise you on reliefs and allowances that could help you to reduce the costs you already have by offsetting them against tax.
If your business expenses are rising and you are feeling under pressure, act now. Cash flow issues are one of the most common reasons for business failure, but they don’t always have to spell the end.
To proactively secure the right support and ensure your business is prepared for the challenges that lay ahead, contact our team in Bedfordshire, Cambridgeshire or Hertfordshire.