Overlooked Money-Saving Strategies For Businesses
Sales don’t always equate to profits. Before an entrepreneur can determine their bottom line, they must first cover operating and other business expenses. Ultimately, keeping costs to a minimum will increase profits. While many companies utilize money-saving strategies to reduce their financial obligations, they commonly overlook methods that positively impact their bottom line. As a penny saved is a penny earned, missing out on these opportunities is like allowing money to go down the drain.
Could you be overlooking essential money-saving practices to lower your operating costs? Continue reading to find out.
End Contracts With Unprofitable Clients
The first tip may seem counterproductive, but it can save your business money. Servicing your clients takes time, money, and resources. When you have clients that place orders sporadically (once a month, quarterly, or annually) and are especially difficult to work with, ending the relationship is an economically-wise decision. It frees up your time and enables you to invest more into clients that generate more significant profits.
Temps, Freelancers, And Independent Contractors
Many new business owners get started doing everything themselves. It’s cheaper than hiring staff as you’ll have to pay for commercial space, salaries, benefits, and employer taxes. However, entrepreneurs must rely on others to remain efficient and keep up with demand as the company grows. A more affordable solution would be to hire temporary workers and independent contractors or outsource to a freelancer.
You can hire skilled professionals for your specific business needs on a short-term, periodic, or as-needed basis. You’ll cover hourly rates, salaries, or contract payments but avoid employer taxes and benefits. You can also scale your need for services up or down as your budget changes.
Tax Credits And Refunds
Businesses that generate more than $600 annually must submit tax returns annually (quarterly, in some instances). While most companies owe money to federal, state, and international governments, there are ways to lower your tax bill. One way to save on business taxes is to claim tax credits. Businesses can get credit for everything from using environmentally friendly vehicles to paying for health insurance plans.
If your business operates in certain countries, you may be entitled to value-added tax (VAT) refunds. VATs are taxes levied on retailers at every stage of the supply chain. These taxes are used to fund international governments. The good news is you can save money. For instance, you could receive a Korea VAT refund if you stayed in a hotel, hosted a seminar or corporate event, rented office space, or manufactured products in South Korea.
Buying or leasing commercial property and covering associated costs is often a large portion of a company’s expenses. While some companies need a brick-and-mortar location to conduct business, some might benefit from transitioning to a digital platform.
Remote workforces became increasingly popular amid the global pandemic. Companies adjusted their policies and procedures and used online resources like websites, eCommerce platforms, and cloud-based applications to operate efficiently. Ultimately, the transition eliminated monthly lease payments, insurance, utilities, maintenance, and repairs, saving businesses a ton of money.
If you own a commercial property or office space, you could always sell it or lease it out to generate more income for your remote business.
Accounts Receivable Factoring
No matter how efficient your invoicing strategy is, there are times when customers don’t repay their debt. When you’ve provided a product or service on credit, it doesn’t count as an official sell until you receive the last payment. If you have multiple outstanding invoices, eventually, they become a financial burden.
One way to save money is to consider accounts receivable factoring. Businesses can sell their past due and delinquent invoices to a factoring company. Although you won’t receive the entire outstanding balance, it will reduce your debt and increase your bottom line.
You started a business with the hopes of turning a profit. If your expenses exceed your company sales, you must research ways to eliminate or reduce your costs. While you may have tried standard methods, you can save even more by implementing some of the money-saving strategies listed above.