1. Use a Bimonthly Cycle for Employee Payrolls
You can save on the administrative cost of collecting, storing and verifying payroll data by reducing the number of expected pay cycles. A bimonthly pay program usually culminates with 24 pay cycles per annum, instead of the 26 pay cycles with a biweekly program.
Another way is to directly deposit salaries into employee bank accounts instead of writing and delivering paychecks. Transfer the funds from your company’s interest-earning checking account directly into the receiver’s account prior to the payroll period.
2. Maintain
Capital Equipment
The longevity of the equipment your company buys depends on how well they are maintained. Regular repairs and replacements will keep all machinery functional for far longer and spare the cost of buying new equipment. Most modern equipment is durable and will last for years, even decades, with proper use. Frequently, office machinery takes longer to wear out, and may no longer be required once it has.
Here’s what you can do:
- Avail a local repair facility which will fix for far cheaper if your equipment is no longer under warranty. Most manufacturers charge heavier prices for repairs. You could even enter a contract with the repair shop to receive a further discount on repair prices.
- Try to buy spare parts from third-party suppliers and use reconditioned parts if necessary. The original parts will usually cost a lot more.
- Regularly check equipment for problems; fix the smaller ones as soon as possible to save on larger repair jobs.
- Try your best to avoid having to invest in the replacement of machinery. If it can be repaired at a justifiable cost, you’ll probably be saved from a major investment.
3. There’s no Real Need for ‘New’ Technology
Better technology is always right around the corner. New products have better features, lucrative prices and crafty marketing techniques. But before you place an order, ascertain that your company actually does have a requirement for that particular upgrade. If the newest features won’t be a meaningful addition to your company’s inventory, it’s best to continue using what you already have. Use the equipment you already own until it is irreparable or until it is no longer required by your business.
Software and hardware updates come all the time. Usually, there’s not much difference between the two versions. And there’s no point investing in features you will not use later. Be prudent when shopping for computers, phones, or software and upgrades. Consider downloading free open-source software to save on the expenses of buying manufacturer content.
4. Buy Second-Hand Equipment
When you look for used equipment, check for companies whose assets have been foreclosed. They’ll probably be selling perfectly functional quality equipment for as little as 20% of the original price. You could check at auctions and local advertisements in the area.
In any case, used machinery is a good idea because it is far cheaper than a new one, usually without comparable deterioration.
5. Defer
Payments
Pay vendors at the latest possible to slow the cash outflow. Also, if there is no penalty on late payments, make your payments from 45 to 60 days after you receive the invoice.
Late payments may, however, affect your contract with the vendor. Since it is crucial to maintain cordial relations with important vendors, alert them if your payments are delayed. And make sure most payments are made within the due date to create a good credit line.
6. Using Cash Instead of Credit:
For many a vendor, the objective is to create a larger cash reserve. For this reason, they may offer greater discounts on payments made by cash instead of credit, prioritizing their cash pool over their profits. If the discount they offer is worth it, make a cash payment.
A business must remain flexible in all market environments. While it is important to build your own cash reserve, and to conserve cash for it, making cash payments may help you save on extra credit card processing fee. You can negotiate an extra discount from sellers on this basis as well.
7. Deposit
your Balance in a Bank
Most of small businesses like to deposit their balance in savings accounts that allow significant interests, but have stringent penalties for withdrawing early. To prevent your money from becoming inaccessible, look for an interest-earning checking account. These have a minimum balance requirement, yet do not charge for withdrawals and can be used to store money that is expected to be needed soon.
The bulk of funds must be kept in the higher-earning accounts, such as savings accounts, certificates of deposit (CD’s) or money market accounts. Customers can be asked to make direct transfers to these accounts so that interests begin to generate immediately.