How do you increase profits (or your bottom line)? There are two options – increase sales or cut the business costs and save.
1. Know your options
Service providers and suppliers often offer discounts if certain requirements are met. Make sure you know what the options are. These may or may not be feasible for your company. Remember your suppliers and service providers are also looking to grow their businesses and are open to negotiation. If you pay them, their cash flow gets better and nobody will decline that. It could be a win-win situation for all parties. Open communication regarding payments can strengthen your relationship with the company and that is what business is built on.
2. Account for ALL costs and be aware of hidden costs
All invoices should be examined before payment. This should be done thoroughly to ensure that your business is only paying for the absolutely necessary services. For example, ensure that the business is not paying for a premier service when the standard option will suffice. Be on the lookout for those sneaky little hidden or extra costs charged for a service that may not be necessary (or even used by your company), such as additional admin costs.
A major busines cost is bank charges. A bank account is a necessary evil in life but that does not mean you have to pay huge amounts. Gone are the days of having an account with the same bank for twenty five years. As we discuss in point 3, look around for a more competitive price and, possibly, a better deal.
Don’t forget about tax!
Shop around for competitive rates
The economy is a fluid beast with it constantly changing and so your business must react to these conditions. You must constantly be searching for better deals, especially in highly competitive industries such as the banking and insurance sector. You should shop around to find out what competitors in these industries are offering and if a competitor’s price is lower, a supplier may potentially negotiate their current rates. Try and avoid staying with the same suppliers because they are friends or you have been with them from the start. They (like you) must also stay competitive in the market.
Once again a strong relationship is imperative for business.
Streamline your payments to reduce costs
A simple way of reducing fees paid during bank transactions or payments is streamlining the process. Plan your payments to a certain time of day or month and only pay during this period. Too many businesses do not realise that they are charged for each and every time they log onto their online banking portfolio and charged for each batch of payments (eg: salaries). Your suppliers will get to know when you pay and they will soon fit in with your schedule if you keep to it.
The use of one central platform, instead of going through various different suppliers, can cut significant costs for a company. Banking costs can be a significant cost to businesses and making use of a platform, which develops, provides and supports electronic fund transfer (EFT) processing for businesses, can enable a business to potentially save a large percentage of electronic transaction banking fees. This also streamlines the process – this results in both saving time and saving money. The accuracy is often increased by this too.
Read more about decreasing business costs here
This article was updated in September 2021