In times of prosperity business owners don’t usually take a hard look at expenses. They may know their bottom line, but most don’t analyze it.
In times of prosperity business owners don’t usually take a hard look at expenses. They may know their bottom line, but most don’t analyze it. Unfortunately, it takes hard times and lack of profits to make a company owner look at where all the money is going.
Saving the corporate dollar should start as a standard practice when the business opens. Nothing is more important as knowing where your money is, and where it is being spent. A trained purchasing professional can usually handle company purchases and use competitive bids and price analysis. If you don’t have a professional purchasing agent or buyer, hire one. They can save you the cost of their salary many times over in a year’s time. Price, speed of delivery and quality are the three elements of a purchase that most purchasing professionals will weigh and act on. If you can’t justify the expense of an additional salary, find a company that will buy for you. Some businesses now specialize in group purchases. Do not leave it up to secretaries or administrative assistants. Most people buy for convenience when using other people’s money. Buying for convenience would be the fastest way to fill the order and get the job done. Price is usually a non-priority.
Have you considered renting computer equipment instead of buying it? Computer obsolescence and depreciation is so fast that perhaps it would be more cost effective to rent a state of the art computer for a year instead of buying one. Perhaps you would only need to rent a computer for a special project that would last a few months. Renting can be more flexible than leasing.
An electronic letterhead or company forms may be more cost effective than printing or copying. Keep an inventory of electronic read-only forms on your computer for distribution as needed.
Expense accounts run amuck?
Expense accounts can get out of hand if not handled correctly. One way to reduce expenses charged would be to require all expenses to be prepaid by the employee on a personal credit card, not a company card. The expenses are turned in and approved by a reviewer. If an item is not approved, it is not reimbursed. Most employees will think twice about charging an item if they feel it may not be reimbursed. This will also put the financial burden on the employee should they not turn in supportive paperwork on time.