3 Smart Ways to Manage the Financials at a Smaller Business

A smaller business that wants to eventually be listed on the AIM market or sell out to a larger competitor can increase the chances of this happening by deftly managing their financials. In this article, we cover three smart ways to manage a small company better from a financial perspective to come out on top.

 

Consolidate Suppliers

Small companies often order goods by letting anyone do so as needed. This is fine when there are only 2-3 people in a tiny office, but it quickly becomes unmanageable when more staff join the business. At this point, everyone is thinking they did right by the company when they got a good deal, but this is rarely the case.

By using a single supplier for most business-related consumables, discounts can be negotiated for larger order values. There’s also the possibility to settle the invoice quickly which sometimes drops another few percentage points off the invoice value too. The total savings add up when a company is organised with few suppliers.

 

Reduce Electricity Costs

The electricity bill is surprisingly high with most companies. The lights are usually on in every room for safety reasons, PCs, printers and other electronic equipment is left running most of the time too. There’s a fair amount of waste with electricity use in the business environment.

To save money, companies must take a sensible approach to electricity use. All electronics must be approached from the perspective of how to save money during its use and when it’s not in use too. This could be when the printer or PC is not needed right now, overnight, or at the weekend when they should be turned off completely. Look for energy saving modes and other energy reduction features to cut the bill down.

Also, use a service that can find the cheapest business electricity provider in the area. One of the best currently is Utility Bidder which can provide an online quote to compare to your current cost per kilowatt and compute out the likely savings in the future.

 

Get More Affordable Insurance

Look for ways to renegotiate business insurance package to make them more affordable too. Consider whether the amount of current coverage is reasonable, not enough, or excessive. If the insurance hasn’t been updated in years, then it could be not enough. In which case, raising the insurance coverage is required, making finding lower priced insurance even more paramount. Look for an insurance broker that can take your company’s coverage requirements and find you a policy that will be acceptable at a lower price than you’ll be paying otherwise. Avoid underinsuring to save money, but don’t overpay either. Also, consider the solvency of the insurer because they need to be able to pay out any claim, so going with a bigger name is sometimes advisable.

Ultimately, by reducing expenditure, it boosts the bottom-line results. This frugality can help the company fund future expansion plans or make it a more attractive acquisition target due to its higher profitability and better return on equity