Cost Management For A Healthy Business
Posted on 11th August 2022
Despite almost two thirds of UK small businesses surviving and thriving after the pandemic almost eight out of 10 say rising costs could put their long-term success at risk.
One third are looking for cheaper supplies in an attempt to cut costs as their energy bills increase at rates we haven’t seen for decades. More than nine out of 10 said that uncertainty about rising costs in 2022 and beyond was their greatest concern.
Energy cost increases
Businesses surveyed by Smart Energy GB said they were monitoring their energy bills, holding back on recruitment and, where possible, using cheaper raw materials for their products to help manage costs which have increased by 13% since the beginning of 2022.
As their customers also face increased expenses tension between maintaining or increasing prices to cover costs and a potential downturn in sales is inevitable. One way to minimise the impact of price increases is by reducing overheads wherever possible.
Options for cutting costs
Keeping track of your cashflow is one of the best ways to manage your costs. Accounting software can simplify and automate your processes and provide useful reports that will show you clearly what you are spending and where reductions can be made.
Postponing purchases like IT equipment might be an option, although you won’t want out of date machines to have a negative effect on productivity. Reducing travel wherever possible is another possibility, especially as many people are now comfortable working from home and holding business meetings online. You might also discuss a revised property rental agreement for your business premises and renegotiate credit terms with your suppliers.
Soaring energy prices
If you don’t have fixed energy rates for your business you will need to keep a close eye on your costs, especially during the coming months. We have seen a number of energy suppliers cease trading when they haven’t been able to pass on increased energy costs to their customers. If your provider fails, your energy supply won’t be interrupted and the regulator, Ofgem, will find a new supplier for you. However, your old tariff will come to an end and your bills are likely to go up.
If your contract allows you could switch to one of the leading energy suppliers now to avoid uncertainty and uncontrolled changes in your energy costs.
Purchasing made easy
To help our clients control their costs, Profectus is now working with the Reducer connected purchasing platform. By connecting your Xero or QuickBooks accounting software to their platform they can analyse your spending history and help you decide whether you’re paying too much for anything from your electricity bill or telephone costs to your card payments and waste management contract.
They will compare your spending with the rates charged by hundreds of suppliers to provide you with personalised purchasing recommendations. Their advisors will be able to answer your questions about your current suppliers or your future choices. You can then choose from their suggestions and the Reducer team will do the rest. They will also keep you up to date with changes in the market and make suggestions for your future spending.
This is a free service for you, funded by any supplier you choose from the recommendations you receive.
For more information about the Reducer service for your business please get in touch.
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