With rising interest rates, a looming recession and more, today’s economy continues to be a gamble for business owners. Whether the economy will grow or suddenly stall, you may want to consider cost-control management to be prepared no matter what the outcome. Cost-control management is a formalized, systematic review of operations and resources with the stated goal of reducing or at least controlling costs at every level.
Doeren Mayhew’s CPAs and business advisors outline six cost-control management tips to implement into your business.
1. Lower Expense
In uncertain times, it’s important to evaluate your spending and determine where you can cut costs to lower overall expenses. You can limit the amount of money different employee levels can spend, keeping more money from going out the door. This will allow your company to keep more cash on hand or invest larger amounts of money in other ways, such as in capital expenses or paying down debt. That being said, this isn’t the time to stop investing in new assets, people or technologies, so be sure to keep focusing on these areas to help sharpen your company’s competitive advantage.
2. Gain Operational Efficiency
Cost-control management can help you clearly identify activities running smoothly and staying within budget from the ones constantly breaking down and consuming extra dollars. By monitoring these activities more frequently, you can quickly make adjustments to ensure your operations operate with optimal efficiency.
3. Monitor Spending
Sit down with your management team to gain their input on expenses and identify what are needed expenses, “nice to have” expenses and ones you can easily cut out. You could also implement a temporary process where your management team is required to get your approval on cutting checks or submitting payments, so you’re more aware of current spending and can ask questions, when needed. Another way to help keep a keen eye on spending is to eliminate or limit the use of company credit cards.
4. Work with Your Suppliers
Maybe you’ve bought the same types of materials from the same vendors for many years. Are you really getting the most for your money or continuously running into setbacks? A cost-control management review can allow you to look for better bargains on the goods and services that make your business run. If you have a great supplier relationship, work with them to negotiate pricing or modify your contracts.
5. Streamline Technology
At this point, just about every business process has been affected by technology in one way or another. In some cases, companies overspend on unnecessary technology. In other cases, they’re missing out on ways to automate or augment an activity with the right technology or tools. Cost-control management can help you decide whether to simplify or upgrade your current systems or platforms. Should you choose to make any changes, just be sure to conduct the appropriate due diligence to ensure your data and information remains secure.
6. Minimize Fraud
Fraud can happen at any time, whether it’s a dishonest employee, outside criminals or hackers attempting to steal money out of your business. Cost-control management can also help you reduce typical fraud risks, as it sets a solid foundation of internal accounting controls within your organization.
It is not easy to compete in today’s marketplace. The rising prices associated with operating a business don’t help, either. Cost control is one of the best ways to keep your business in shape so it continues to perform well in a variety of economic environments. Our CPAs and advisors can help you identify cost-control methods that fit your business’s needs.
Looking for ways to cut costs in 2023?