Cost saving tips for your business

BUSINESS BITS
Maribeth Delgado

Knowing which expenses you can live without can help your purse tightening achieve an optimum level As business costs and markets get more competitive, the business that figures out how to save on costs while maintaining excellent service is king. That is why managers are increasingly finding out that looking for and unlocking profit opportunities from within their business costs can help a company trim the fat and stay ahead of the pack.

Here are some simple cost-cutting ideas on ways you can improve your company’s profit and cash flow:

Centralize purchasing. You may be buying the same goods from different suppliers, particularly if each department seems to have its favorite suppliers. Centralize purchasing to maximize discounts through bulk purchasing power.

Cut the paperwork. Request monthly consolidated invoices to reduce administration costs.

Demand a reason. Don’t accept a price increase without challenge.

Get a second opinion. Obtain alternative quotes on everything. Advise existing suppliers that you are going out to bid and give them a chance to reduce their prices.

Ask for ideas. Take advantage of your suppliers’ expertise. Ask them for suggestions on how to improve the way you work together. Could ordering weekly instead of daily allow them to reduce their own administrative costs and enable them to pass the savings on?

Save space. Reduce your stock levels and encourage suppliers to hold stock.

Consider couriers. Understand how your couriers charge. Some local services may be best for early-morning deliveries, while others may offer lower prices for local delivery of letters and packages scheduled for later in the day. Determine which services will be most effective for you and establish guidelines for your staff.

Watch out for automatic renewals. Contracts for leased equipment such as copying machines automatically renew. This automatic roll-over is called an “ever-green clause” and it locks you into subsequent years at the same terms as the original lease. Service agreements, too, have ever-green clauses and need to be terminated, in writing, during a specific time window. Just to make things confusing, termination notification periods for service agreements vary from the periods used in the lease agreements. The window is typically 30-90 days before the expiration date.

Make space. If you pay for staff parking, do not allocate a specific space to a specific staff member. Have 7% percent fewer parking spaces than the number of staff entitled to them. On any day, you’ll find that there will be a certain number of absentees; you don’t need to pay for empty spaces.

Try brand X. Use suppliers’ own-brand products. This can reduce costs by up to 30 percent. As the economy slows and business costs grow, it’s becoming increasingly difficult to rely on earnings growth to improve the bottom line. the company that knows how and where it can optimize will always be ahead of the competition.

(Marybeth Delgado is the Philippines Director of Expense Reduction Analysts, a worldwide consulting company that specializes in reducing overhead expenses with fees coming from the derived savings. She can be reached at or 632 215 6315 or mdelgado@expensereduction.com.)