The troubled economy could be detrimental to any business and a close eye on cash flow can mean the difference between profit and loss. As keeper of the books, finance managers are in the prime location to evaluate expenditures and find ways to save the business money and stand out as a valuable asset to the organization. If done carefully and judiciously, cost cutting can help maximize efficiency without negative repercussions.
So how do you decide which costs are necessary and how cuts will affect the operations of the business?
Separate budget items into necessary costs and optional costs then see which of the optional costs are driving growth and sales. Optional costs that are not adding to the business are prime candidates for budget reduction. As far as the necessary costs, look for different options that can achieve the same result for a lower price, such as a less expensive telecom package. Consider long term cost cutting measures involving revamping procedures, general accounting and purchase order processing are two of the top ten places companies can reduce costs, as opposed to short term solutions that may have unexpected consequences. With some evaluation, research, and creative thinking, a surprising amount can be trimmed from the budget.
For more information and ideas on how to pare down business costs, here are a couple additional resources worth reading:
Business Finance Magazine – Top 10 Opportunities for G&A Savings
CFO.com – Keeping Cash Safe