Valuable Cost Cutting Initiatives

Any company director or CEO will be aware of the recent struggles both financially and operationally within businesses due to the recent collapse of the economy and the reluctance of banks’ lending. Small businesses are feeling the pinch more than ever as sales, leads and new clients are simply failing to cover the huge deficit of outstanding debts. Most of this debt is due to contracts and deals that were made before the recession hit, meaning many directors are being punished unfairly.

Whilst a winding up petition is not high up on the list of concerns, they can be devastating and avoiding them isn’t as hard as people may first assume. Cost cutting initiatives are an ideal place to start when faced with financial problems. Company directors and CEOs should be making sure the following steps are being followed:

1. Without keeping accounting records relevant, up to date and accurate, a director will have no idea where their company is at financially at the present time. Without this information, solutions and changes cannot be made.
2. Although it may already be a practice that is being performed, chasing up customers with outstanding debt and practising good credit control is highly advantageous. If things are running promptly, less time will need to be spent re-arranging accounts.
3. Negotiating a new deal with suppliers may be the answer, especially if they have been favoured for a long period of time. If a deal cannot be sought then it is advisable to search elsewhere for better prices and better trading conditions.
4. Consider relocating if a new deal cannot be made with an existing land lord. Due to the amount of office space going spare up and down the country, prices can be extremely competitive meaning better deals can be sought by moving locations.
5. Recruiting using an in-house team or manager will save a company thousands of pounds. Agencies will add additional charges and commission onto any role they successfully fill. Cutting these middle men out will save a business a substantial amount of money.

Redundancies, staff cuts and unpaid voluntary leave are all cost cutting incentives; however these should be the last call of action. Keeping staff happy and well looked after in the work place is of extreme importance, especially where productivity is concerned. Seeking financial and insolvency advice as early as possible is the best call of action.

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