All businesses have expenses, and managing your business spend is crucial to keeping your company in the black. But once you turn that money spigot on, it can be hard to control the flow.
Nevertheless, managing your business spend can reap a range of benefits for your company, because it helps you get the most out of every dollar. From sourcing supplies and goods to hammering out contracts and paying customers, spend management allows your company to organize business units around spend categories and can give you a comprehensive view of processes, improvement, risks, and spending. With regular expense review, digital tools, careful hiring and training, and the right financial tools, your business can control its spend and focus on growth.
1) Review Your Spend Regularly
Perhaps the most important thing you can do to control your business spend is to take the time to go over your business expenses regularly. Unless you have a bookkeeper giving you regular and professional cash-flow analysis, then setting aside time to review your business expenses is a must – and even if you do have such a person on staff, it’s still important to sit down with the books once in a while and go through all of your business expenses. As you go through the expenses, ask yourself the following questions:
- Is this expense really necessary?
- Am I getting the best price for this?
- Will the rent or other operating expenses be increasing?
- What personnel growth is required in the near future?
- What spending categories are really getting out of hand?
- Are we meeting our sales goals?
- What new or unforeseen expenses have recently come up?
This is your chance to trim the fat from your budget by eliminating or reducing current operating costs. It’s also a chance to make room in your business budget for new expenses that are coming up, such as the cost of additional advertising, or hiring new employees to meet increased demand. You should do this at least once a year, although quarterly expense reviews are optimal.
2) Digitize Business Spend Management (BSM)
BSM gets complicated when you’re juggling expenses throughout the year, especially when spending information is spread out across multiple departments or business units. Centralize your BSM with a digital solution. You’ll be able to easily manage contracts; audit suppliers; track maintenance, repair, and operations; and bring together expenses across your organization. Digital spend management tools can also help you collate a quarterly or yearly business spend management benchmark report, so you can compare your processes, performance, and practices to those of industry leaders.
3) Stretch Your Money with a Business Rewards Credit Card
Business rewards credit cards are one of the best and easiest ways to get more out of your business spend. You can’t run a business without spending money, and when you pay for bills and expenses on a business card, you can rack up rewards points that can help cover travel or pay cash back.
Using a business credit card to pay expenses can also help you streamline expense tracking, which can be especially useful if you’re running a small business. You can pay all of your bills and expenses with one card, pay online, and have everything on one statement. Just make sure you choose the right card or cards for your needs.
4) Hire Carefully and Train Carefully
Few things are more expensive for a company than hiring and training a new person. It costs a lot of money to find someone, and then it costs more in lost productivity while other employees set aside their own tasks in order to train your new hire. That’s why it’s so important to be cautious in the hiring process.
A bad hire can cost you, and not just in terms of lowered productivity and lost wages – a truly bad hire can do irreversible damage to your company with their behavior. Use a strong hiring process and don’t be rushed. Once you’ve hired someone, take the time to train them properly.
5) Go Paperless
Paper, ink, and printers aren’t cheap. You’d be surprised how much you can save by going paperless. Of course, you’ll still occasionally need hard copies of stuff, but you can use apps for most things – like calendars, for example. If you can’t completely eliminate paper, try to minimize it as much as possible. You’ll save some trees as well as opening up room in your budget for things you just can’t do without.
Business spend can quickly get out of the control, and letting it do so can tank your business. Rein in your business spend, and you’ll be able to use your budget to grow your business, instead of letting your expenses crush you.