Can you remember when you last had a long hard look at the things your business is paying for?

If you haven’t even glanced at these since signing off last year’s accounts, it’s certainly worth investing half an hour to quickly run through and review your transactions for the past two quarters. Let’s face it, this is an ideal time for a spring clean!

Having a spring clean of all the costs in your business is certainly a process we support our clients with, with some regularity, and also something that we recommend they do (and we do ourselves) in the personal accounts too. The chances are that you’ll find several outgoings that you don’t think add any value any more and you might be surprised at the savings that can be made for such a small investment of time.

We find that a great place for costs to keep recurring without really being controlled are software and other subscriptions – a prime example of where managing your costs may well enable you to trim back a little.

For many companies, the decision to switch to using subscription software services is a great way to streamline operations and associated admin costs – not just in finance but in Operations, HR, admin, legal and logistics. But it’s important to keep an eye on those subscriptions and to manage them in an efficient and effective way… we worked with a PR company that was spending approx. £2,000 a month on various subscriptions they thought they’d cancelled and didn’t realise they had!

 

So what’s the best way to keep tabs on them all? Our tips to spring clean include:

  1. Review the costs every month that come out on Direct Debit through the bank account, and do take a long hard look at the company or personal credit card statement.
  2. Make it someone’s job to make sure every cost is approved – often business owners just rely on their bookkeeper to record the transactions and the bookkeeper just keeps posting transactions (especially as many of the accounting systems now a days can “learn” where to put transactions for you).
  3. Don’t let your team get hold of the company credit or debit card without some form of approval from you. Set some delegated authority levels (buying approval levels).
  4. Implement a system for regular reviews of certain cost lines, perhaps a different category every month or a raft of cost every quarter – subscriptions, adhoc software, stationery, memberships, mobile phones, credit cards, email accounts, etc.
  5. Keep a spreadsheet of the ones that have been approved and why you’re using them and what value you’re expecting that subscription to add to the business and review that regularly.
  6. If you don’t know what something is, chances are no one uses it anymore. It can be a high risk strategy but if no one is confessing to subscribing to something and no one knows why you’re paying for it, cancel it and see who yells!
  7. Compare your costs against your budget and last year – Once a year tally up how much you’re spending and decide what costs or areas you could do differently to reduce the cost – investing this time can potentially wipe a lot of money from your annual spend – a LOT of money that could be spent elsewhere.
  8. Look at marketing costs by channel and make sure you know what your cost per client acquisition is for every channel – what works and what doesn’t. Test and measure and adapt accordingly. There’s a reason most corporates have an analyst attached to their marketing team.

 

If you are looking to understand how your finance function could better support the needs of your business please get in touch with us by email hello@yourrighthand.co.uk or call 01252 820002.