Business tips – reduce expenses

Looking at what you’re spending on a regular basis can feel like it takes up time you don’t have. However it’s important to remember that markets change regularly, and what was a good price 12 months ago may not be now. Here are some tips from us on where to start.

Use technology

Investing time now looking for technology solutions will save you time and money later. 

Software that you’re using now might have time-saving functions. For example, did you know you create bank rules in Xero to save time reconciling?

Create a bank rule
Create a bank rule (video) [2:23]

Apps can save you time by communicating with other software, like Xero and MYOB

  • Payroll systems can connect to your accounting system
  • Hubdoc can connect to your bill providers, scan and read your invoices, and convert to Bills to pay in Xero (included free with a standard Xero subscription)
  • Your invoicing system should remind your clients to pay you
  • Shopify transactions can upload into most accounting software systems

Back to top

Use third parties

There are actually people out there who love doing the things you hate! OK – it may actually increase expenses, but the intangible benefits may outweigh the cost. 

What you need to consider is the value of your time – not necessarily in dollars.

  • A book-keeper may spend three hours a month on things that take you six
    • Is it worth paying $150 for an extra six hours with your family, friends, exercise? Or doing what you do best and running your business?
  • Debt collectors can “buy” your receivables, giving you money up-front. They can also chase your customers in exchange for a percentage of money collected.
    • What’s best for you – spending your time sending reminders, phone calls, letters for late payers, or paying somebody to take that stress away?
  • A new employee could lessen your stress and workload, even on a part-time basis.
    • Again – weigh up the cost against improving the quality of your own life, or spending your time where you create the most value for your business.

Back to top

Review three expense codes

Often costs just start to add up. You’re busy in your business, not watching every payment or invoice, and several things can happen:

  • You keep paying accounts, even though you know they are not providing any great service for you, but it takes too much energy to review and cancel.
  • You’re paying too much for some goods and services because you feel loyal to a supplier, or it takes too much energy to get new quotes.
  • Better solutions have come along but inertia is keeping you with the same old solution.

So, pick a rainy day and if your accounting system is reconciled and up to date, pick any three expense codes and look at all the transactions for one quarter. A good start is examining Advertising costs. Are you getting any benefit from being in the Yellow Pages and printing flyers, or would digital be better?

 Check out these simple “how-to” guides from Xero.

Detailed Account Transaction Report
Account Transaction Report

  • Make notes as you go about any improvements that you can see (I guarantee you will find something!)
  • Set aside some time to implement the changes
  • Do it!

Back to top

Cut your wage bill

This is not an invitation to fire people or cut wages for individuals!  Many businesses are constrained by how many good people they can find. This is a tip around using the good ones you have to better effect.

Inefficiencies can creep into businesses, even with the best people.  We get comfortable doing the same processes and then it becomes hard to change them.  

This is all about creating more productive systems for your good people to work in:

  • Spend time with your key people, talking about where they spend the most time, what frustrates them and if they have any suggestions for change.  Usually, the people doing the work have the best idea about how to improve things.
  • Write down the changes they have suggested and review them – do they make sense to you?
  • If the answer is yes, empower change in your team. Let the person who suggested a change, lead it, with your support.

Set a target for improvement, say 5% less time on a task.  

Make sure you have some way of measuring the improvement so that you (and your team) know when it’s achieved.

Back to top

Example

In Beany, we used to have a tax summary and a management letter to our clients.  Both documents took quite a bit of time to prepare and upload.  We had always done two documents and we kept doing it until a new team member said “Why do we include the tax payments information in the management letter?” Seemed rather obvious when someone pointed it out!  We streamlined the two documents and saved 20 minutes per job.

Back to top

-

How useful was this post?

Heaps more great posts like this..

On our social media.

Sorry you didn't enjoy this post.

Give us some feedback.

Menu