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Money Saving Tips Any Business Can Put into Practice

April 13, 2018

Source:There is an old saying, “To be profitable is to save money.” A small business needs every advantage it can get when it comes to trimming expenses and unnecessary cost. Here are a few savings tips for every business.

During tough economic times and a very competitive business climate, small business owners are doing all they can to conserve cash and increase accountability of the best use of their working capital so that they avoid watching their margins of profit from slipping away in between the floor boards. “A penny (or dollar) saved is a penny (or dollar) earned,” so here are a few tips a small business can adopt in order to save on fees, interest payments, and other bills that seem to cut into an owner’s profit margins.

1). Do away with debit/credit card use-switch to a reimbursement system. Banking institutions have switched their business model to a fee based revenue generation machine; which is different from when banks mainly profited from interest payments and fees attached to loans and loan servicing. Every time you use your debit/credit card, there is a transaction fee, either at the merchant and/or at the bank, and sometimes both. Ever use an ATM that is not affiliated with your bank? You will find in those cases multiple usage and service fees from ATM Vendor, the bank it is associated with and your own bank. Some of these fees range from mere twenty or thirty cents upwards to three or four dollars.

To avoid watching these fees and service charges cutting into your profits, stop using debit/credit cards for every little business transaction. Also, if you have multiple employees, you will want to limit their usage of these cards as well. Use a draw of petty cash that is withdrawn from the bank in-person. Use cash on smaller transactions under $100 when applicable. As it relates employees, you can set up a system in which they front the initial expenses they incur on behalf of the business, such as tolls, parking, gas, lunch or dinner meetings with clients, postage, and other purchases that make up the vast amount of small transactions. Once a week, have each employee submit their receipts to the company accountant for reimbursements and issue them a check for these expenses. Less usage of debit/credit cards means less fees you are charged.

2). Pay your vendors and/or suppliers early. Many of your vendors and/or suppliers may be on 30, 60, or even 90 day-payment terms with your business. This allows for your business to have the time it may take to sell inventory or service a client account before you have begun covering your cost of goods sold. Many distributors, vendors, and/or suppliers do offer a discount if payment is received before the 30 day window. Usually the offered amount is 2 percent discount if a bill is paid within 10 to 15 business days. If such terms are offered, pay your bills early to take advantage of these discounts.

If your business has a burn rate of say $10k per month, two percent is $200 saved per month ($2400 a year). That is $200 that is found money which can be applied to other parts of your monthly budget, such as marketing and advertising. If your vendor and/or supplier does not yet offer you early payment terms, negotiate this upfront with them. This is a small concession they will be glad to offer in keeping you as a client. It is of no risk to them. Most vendors or suppliers are accustomed to not receiving payments until 30 days after they are due.

3). Pay your credit card balances on time and/or in full. Most small business owners utilize credit cards as a form of business credit to keep their business afloat in between getting paid by clients. Most small business owners and managers often take credit card offers that provide “interest free,” or “low-interest” on credit that is borrowed. Many of these deals are contingent on payments being made on time and/or in full. When only the minimum balance is paid, a small business owner now loses the low interest deal they first had when they acquired the card. To avoid these increases in interest rates and service fees, pay the balance off in full and on time.

Another practice you can try in saving money when using credit cards is to call the credit card provider themselves and negotiate a “one time balance paid in full” when you have a high balance and are looking to close your account. Credit card companies would rather receive payment on an account that is closing than have it sent to collections. Usually if you get a manager or supervisor on the phone, you can ask to negotiate a final settlement offer. This saves you money in fees, interests, and charges, and clears the credit card company of the account.

If you are using credit cards to make purchases for business growth needs, consider joining a barter exchange that has a multitude of businesses connected to their network in which you can engage in. Barter is interest-free.

Samuel K. Burlum is an investigative reporter who authors articles related to economic development, innovation, green technology, business strategy, and public policy concerns. Burlum is also a career entrepreneur who currently lends his expertise as a consultant firm to start-up companies, small businesses, and mid-size enterprises, providing advisement in several areas including strategic business planning, business development, supply chain management, and systems integration. He is also author of The Race to Protect Our Most Important Natural Resource-Water.

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2 Comments leave one →
  1. May 12, 2018 9:58 am

    Hi Natural Awakenings Team,

    My name is Anuj Agarwal. I’m the Founder of Feedspot.

    I would like to personally congratulate you as your blog Natural Awakenings Milwaukee Community Blog has been selected by our panelist as one of the Top 25 Milwaukee Blogs on the web.

    https://blog.feedspot.com/milwaukee_blogs/

    I personally give you a high-five and want to thank you for your contribution to this world. This is the most comprehensive list of Top 25 Milwaukee Blogs on the internet and I’m honored to have you as part of this!

    We’d be grateful if you can help us spread the word by briefly mentioning about the Top 25 Milwaukee Blogs list in any of your upcoming post.

    Please let me know.

    Best,

    Anuj

    • May 30, 2018 10:31 pm

      Thank you! We will definitely mention Feedspot’s Top 25 Milwaukee Blog lists.

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