Review your business expenses - and save
Binghay Co • April 1, 2024
Running a business costs money. There are always costs, overheads and supplier bills that mount up – and these expenses will gradually chip away at your cash position, making it more difficult to grow and make a profit.
So, what can you do to reduce your spend levels? And what impact will this have on your overall margins, profits and ability to fund the next stage in your business journey?
Getting proactive with your spend management
Spend management is all about getting in control of your expenses – and, where possible, aiming to reduce the level of costs and overheads that you incur as a company.
Excessive spending eats into your cashflow, reduces your profit margins and stops you from achieving the profits that you’re capable of as a business. So if you can get proactive with your spend management, you can actually make your company a far more financially productive enterprise – and that’s great for your overall business health.
So, what can you do to reduce spend and slim down your company expenses?
Here are some key ways to reduce expenses:
- Reduce your overheads – your overheads are the unavoidable costs of running your business, producing your products or supplying your services. If you have bricks and mortar premises, these overheads will include rental payments, utility bills and the cost of paying your staff. Drill down into the numbers and see where there are opportunities to reduce these overhead costs. That could mean moving to smaller premises, or reducing the size of your workforce, to reduce payroll expenditure.
- Put limits on staff expenses – if your employees can claim expenses, or buy raw materials and equipment with the company’s money, these costs can soon start to rack up. It’s a good idea to put a spending limit in place, so each staff member can only spend up to an agreed amount. Having a clear expenses policy helps, as will training up your staff in good spend management techniques. Expenses cards or expense managment software will allow you to quickly set spend limits, track expenses and pull your expenses data through to your cloud accounting platform for processing.
- Look for cheaper suppliers – if you can reduce your supplier costs, this will go a long way to bringing down your overall spend. If you’ve been with certain key suppliers for years, look around for new quotes, look at current market prices and see if you can negotiate better deals. And if your old suppliers aren’t flexible enough, try swapping to newer, more eager suppliers who will be willing to meet you in the middle on price.
- Make your operations leaner – the bigger your operational costs are, the less margin you’ll make on your end products and services. One way to resolve this is to aim for a ‘lean approach’, paring back your staff, resources and operational complexity to the bare minimum. By making the business as lean as possible, whilst still delivering the same output, you keep your revenue stable, but reduce the spend level that’s eating into your cost of goods sold (COGS). The smaller your COGS, the more profit you make on each unit or sale – and that means better cashflow, more working capital and bigger profits.
- Explore tax reliefs – you might assume that tax costs are an unavoidable expense when running your business, but it’s worth exploring which tax reliefs, grants or other business benefits you may benefit from. For example, research and development (R&D) tax credits that help cut your corporation tax expenses if you can demonstrate that you’re involved in innovation and groundbreaking R&D within your industry or specialism.
Talk to us about improving your spend management
If you’d like to get in control of your expenses, we’d love to chat. We’ll review your current costs and will highlight the key areas where expenses can be cut. Then we’ll help you formulate a proactive spend management programme, to reduce your unnecessary spending.
If you want to learn more about this topic and how we can help your business, contact us to set up a FREE consultation so we can get started.
Binghay & Co are Accountants & Business Advisors located in Docklands, Melbourne.
The new financial year is already in full swing, meaning most of you are still finalising your general ledger accounts in order to get the necessary information to us to prepare your final 2024 accounts and tax returns. Others have already got us your information and are looking ahead. Either way, it can be a time when we forget our current tax obligations, due in relation to the beginning of the 2025 financial year. In order for you to be across your tax obligations, below are the key compliance dates that are coming up. Make sure these lodgments are up to date to avoid any interest or penalties. KEY TAX DATES – SEPTEMBER/OCTOBER 2024 21 September 2024 – GST – Monthly Activity Statement and payment for August 2024 21 September 2024 – PAYG withheld – Monthly activity statement and payment for August 2024 21 September 2024 – PAYG instalment – Activity Statement and payment for monthly reporters for August 2024 30 September 2024 – TFN withholding report – Annual TFN withholding report for closely held trusts where a trustee has been required to withhold amounts from payments to beneficiaries during the 2024 income year 30 September 2024 – PAYG withholding payment summary – 2024 income year annual report due if lodged by us 21 October 2024 – GST – Monthly Activity Statement and payment for September 2024 21 October 2024 – PAYG withheld – Monthly activity statement and payment for September 2024 21 October 2024 – PAYG instalment – Activity Statement and payment for monthly reporters for September 2024 21 October 2024 – Annual PAYG instalment – Payment of annual PAYG instalment for 2023–24. Lodge only if instalment amount varied or the rate method to calculate the instalment is used 28 October 2024 – GST – Quarterly Activity Statement and payment for the July to September 2024 quarter if you do not lodge with us 28 October 2024 – PAYG withheld, FBT instalment and PAYG instalment – Quarterly Activity Statement and payment for the July to September 2024 quarter if you do not lodge with us 28 October 2024 – Superannuation guarantee – Due date for superannuation guarantee contributions for July to September 2024 31 October 2024 – Income tax – Due date for lodgment of 2023–24 income tax return for individuals, trusts and partnerships if you do not lodge with us 31 October 2024 – GST – Lodgment of annual 2023–24 GST return for instalment payers who are required to lodge tax returns by 31 October 2024 31 October 2024 – Companies – To provide distribution statements to shareholders for 2023–24 for most companies 31 October 2024 – Income tax – Due date for lodgment of 2023–24 income tax return for an entity that has one or more prior year tax returns outstanding as at 30 June 2024 31 October 2024 – SMSFs – Annual return for new registrant SMSF if the ATO has provided this due date We’re here to help if you’re facing operational issues, tackling people challenges, or have health and safety questions, give us a call or email us.
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For centuries, accounting focused on reviewing historical data, which only tells you about the past. This backward-looking approach limits your ability to plan for the future, explore scenarios, and understand your business's trajectory. The Advantage of Forecasting Forecasting changes the game by allowing you to project future sales, cash flow, revenue, and profits. This proactive approach helps you take control of your business and navigate its journey more effectively. How Forecasting Adds Value Spotting Patterns : Forecasting tools analyse historical data to reveal patterns, trends, and opportunities. For instance, it might predict a seasonal downturn, enabling you to plan and mitigate potential impacts. Future Insight : Instead of only reviewing past performance, forecasting offers a forward-looking view. It’s like using a GPS to navigate the road ahead, rather than just checking the rear-view mirror. Scenario Planning : With accurate forecasting, you can explore various "What if?" scenarios and assess different strategies. This helps in making informed decisions about your next steps. Evidence-Based Decisions : Combining historical data with forecasts provides a comprehensive view, aiding in strategic planning and identifying potential threats. Enhanced Accountant Collaboration : Forecasting gives us a detailed understanding of your business, allowing for better strategic advice and performance improvement recommendations. Discover the Benefits of Forecasting Ready to take control of your company's future? Contact us to learn how forecasting can highlight potential threats and opportunities, and help you develop a proactive strategy to enhance your business performance.
