Mid-year is an opportune time for a budget checkup—including a review of where you can cut costs. “Too often, business owners are so consumed by day-to-day operations and short-term objectives that they overlook potential cost savings,” says Salim Omar, CPA, president of Straight Talk CPAs in Morganville, New Jersey. Consider these strategies:
1. Refinance debt. With interest rates still at historic lows, many small businesses could find significant savings by restructuring or refinancing their debts. “See what you’re paying and shop around,” Omar advises. He recently worked with a small dental practice to consolidate its debt at a lower interest rate and save more than $25,000 in the course of a year.
2. Automate mundane, time-consuming tasks. Automation can yield substantial savings for small businesses by increasing efficiencies and making better use of staff’s time. While software as a subscription (SaaS) services often require monthly subscription fees, they can save small businesses in the long run through enhanced productivity. For example, FreshBooks can automate invoicing and timekeeping. MailChimp can automatically respond to customer emails, and Hootsuite can automatically post to social media.
3. Outsource complex tasks. Consider outsourcing non-automatable tasks that are not within your core business competencies. It can be tempting to try to keep everything in-house—to handle website SEO yourself, for example, or have the office manager handle payroll or troubleshoot the computer network. But this approach can cost money in two ways:
- A hit to personal efficiency. Research shows that switching between complex tasks can take up more than 40% of a person’s productive time.
- Missed opportunities due to lack of professional knowledge. For example, some small businesses fail to consult CPAs because they don’t want the expense, but in the end, they lose money by not making the best financial decisions, says Susan Curran, CPA, CFP, principal at Susan Curran Financial in Dripping Springs, Texas. “Your time and energy are limited, so it’s better spent growing revenues than doing everything yourself,” she says.
4. Collect receivables faster. Invoicing and collecting payments in a more timely fashion can reduce collection expenses and write-offs, Omar says. In fact, SMBs spend an average of 15 days per year chasing delinquent debt, only to have to write off 10% of it as bad debt.
“Put a system in place to invoice immediately after work is completed,” Omar advises. “It’s a simple tweak that sends a powerful message that a business expects to be paid promptly. That can make a big difference.”
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