Every dollar counts when running a business, so it’s critical to keep a tight rein on your expenses. If not monitored carefully, spending can quickly get out of control and put a serious strain on your operation’s financial health.
Outside of hiring an experienced bookkeeper to keep track of your expenses and monitor areas where you might be bleeding cash, there are several other ways you can keep your expenses in check. With this in mind, here are five cost-cutting measures that can help your company stay successful.
1. Encourage Remote Work
During the pandemic, telecommuting and remote work became the norm rather than the exception. Even now that the shutdowns are over, many companies are choosing to keep a large number of their workers at home or adopt a hybrid approach, which allows employees to work both from home and in the office.
One of the main reasons for this shift lies in the tremendous potential to cut costs. In fact, according to Global Workplace Analytics, employers can save up to $11,000 per year for each employee working remotely at least half-time. Beyond the direct cost savings, remote work also improves employee morale and job satisfaction, both of which help boost productivity—and in turn, your bottom line.
2. Utilize Independent Contractors
Employees are typically among your company’s biggest expenses. Given the cost of employees, one of the best ways to reduce labor expenses is to use independent contractors (ICs) whenever possible. In addition to saving on payroll taxes and employment insurance, you also don’t have to offer ICs benefits and other perks, such as health insurance, retirement plans, and paid time off. These savings add up.
3. Pay Invoices Early
You might be surprised by how many vendors are willing to give you a small but meaningful discount for paying your invoices early. For example, it’s common practice for vendors to offer a 2% discount when you pay your invoice in full within 10 days, instead of the typical 30 days. Paying invoices early can help establish a strong relationship with vendors but more importantly open the door to potential bigger discounts. Paying on time even helps you establish good business credit. And the better your credit, you are more likely to attract new vendors, investors, and lenders.
4. Use A Cash-Back Business Credit Card
Speaking of credit, if you have a good credit score, you can qualify for business credit cards that offer cash-back rewards, and use those cards to pay for large or regular purchases for your business. And if you travel a lot for business, you may want to look into business credit cards that reward you with airline miles instead.
5. Take Full Advantage Of Tax Deductions
Although taxes are the single-biggest expense business owners face, you can greatly reduce your tax bill by taking full advantage of every possible business deduction. And there are a ton of deductions available, some of which you may not be aware of, including a few only available this year. As tax season comes to a close, it’s important to keep us in mind for next year to ensure you don’t miss out on any deductions.
Outside of these measures, there are sure to be numerous additional ways you can streamline your finances. As your local Family Business Lawyer™, we’ll assess your current financial systems and advise you about additional ways you can shore up any weak spots in your company’s financial foundation.
Staying on top of your finances in this way will not only prevent you from running out of money, and it will also free up your time and energy to focus on the big-picture responsibilities needed to ensure your business not only survives but also truly thrives. Contact us today to get started.