How to spend less
6 great tips to help you reduce your business costs ....
Regularly compare suppliers for optimum terms and prices
An efficient way to compare suppliers is to keep a file on each supplier and in these files include: Current catalogues and price lists, List of locations, Details on minimum purchase requirements, Delivery options, Technical support charges, Payment terms, Copies of all invoices, Any special terms for seasonal items.
Minimise inventory levels
By keeping inventory levels to a minimum your outflows will be reduced which will free up cash flow. Regularly monitor your inventory levels to see if they are in line with industry norms. Here is a quick calculation you can use to determine how much inventory you should stock:
Cost of Goods Sold x 365 (days) = Days it takes to turn over inventory
Be more cautious when deciding to hire people
Before you decide to employ new people see how you can boost the productivity of your existing people. By doing this it may turn out that you do not need to employ anyone else after all. You have boosted results and at the same time you have saved money in wages costs.
Utilise Online Banking
Online Banking saves your accounts people a considerable amount of time by not having to write out cheques, address envelopes, purchase stamps and mail letters. It will also save in postage and stationery.
Maintain better control over purchases
By consolidating the purchasing of supplies you may be able to negotiate better prices and also by having all purchasing functions done by one department this enables you to keep better control of what is being spent on what.
Take advantage of early payment incentives
If you are offered a discount of 2% for paying before the due date, pay the bill early unless you have a severe cash flow crisis. After all, 2% on a 30 day invoice is equal to a 24% annual return if you had invested the money.
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