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10 tips to reduce your overhead costs
by John Linnard on 16 January 2012
Managing costs is vital at any time and creating a cost culture in your business is key. For small and medium sized businesses, getting the best deals are not always easy with many of the best prices reserved for large organisations. However, there are simple ways to make major savings across your business outgoings by following our tips below and using a procurement specialist.
1. Utilities: ensure you terminate your supply agreement within the timeframe indicated by your supplier, even if you are considering staying with them. ‘Rolling-over’ onto ‘standard’ rates is very expensive and should be avoided. A reputable broker will manage the entire process for you from termination to renewal.
2. Telecoms: landline, internet and mobile costs are coming down all the time. However, beware the hidden clauses which tie you in to supply agreements longer than you need. A professional provider will offer to lower your prices even during the course of a contract.
3. Photocopiers: the devil is in the ‘small print’. Use the services of a specialist to avoid overpaying substantially on such charges as ‘cost-per-copy’ and ‘minimum usage’ elements.
4. Postage/Franking: there are only 4 licensed suppliers of franking equipment in the UK, some offer more cost-effective solutions than others. There’s a tendency to maximise profit by over-specifying equipment beyond the needs of the customer.
5. Banking: there’s traditionally been a reluctance to ‘take on’ the banks, even when being charged excessively for services. Consult with an independent specialist, whose market knowledge will ensure you get best advice on your banking arrangements without the need to change bank.
6. Office Supplies: its common policy for stationery companies to establish a ‘core list’ at low margins for customers which seem very attractive at first but don’t tell the whole story. Items beyond this list are often inflated but may not be noticed by the customer. A good office supplies partner will maintain low margins on all items bought.
7. Lighting: the cost of replacement lighting, particularly in industrial plants, is not only the cost of the lighting itself, but the cost of labour and disruption caused. LED lighting, although has additional initial cost, lasts thousands of hours longer, is better quality and is more cost-effective in the long-term. A committed LED lighting supplier will offer payment terms which will offset capital investment costs.
8. Foreign Exchange: if your business requires international currency transactions, don’t assume your bank will offer the best rates. Smaller, fully-regulated FX specialists will often offer more attractive rates at zero commission.
9. Insurances: companies and individuals commonly assume that the policies they have with long-standing brokers or friends and acquaintances are the most competitive, due to the ‘special’ relationship they have. This is often quite the opposite, although there are of course honourable exceptions! Try the services of reputable SME specialists to test the market and perhaps gain access to improved coverage at lower cost.
10. HW Expense Control has many years experience in providing free-of-charge advice on all the overhead costs listed above. Please call 0207 112 7004 or email john.linnard@hwec.co.uk to arrange an initial 1-hour consultation.
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