How to streamline your business' finances in the cost of living crisis

As UK energy bills spiral and inflation runs rampant, the cost of living crisis is hitting us hard with no end in sight. While this greatly affects household budgets, it’s the same problem for businesses too.

You may be wondering how to cut back on costs, whether that’s tweaking your daily operations, introducing an effective budgeting strategy or keeping a better eye on your cash flow management. We have some tips below to help you slash costs and run your business efficiently to weather the storm.

Keep reading to learn our top tips so you and your business can thrive during hard economic times.

Tip #1: Deal with the problem head-on

If your business is struggling with rising costs or customers are cutting back on discretionary spending, you should first identify where the problem lies with your business finances. Easier said than done, we know, but once you get to the root of the problem, you can fix it quicker.

Perhaps supply chain issues have led to an increased price in raw materials that you need to manufacture products - you could look at negotiating terms with existing suppliers or finding new ones to ease the financial strain.

Another example is inflation on your everyday expenses making margins tighter than they were before. Reviewing where all your business’ money is going and where you can cut back in the budget can help here.

Whatever it is, getting to grips with the business finances will be the single most important thing you can do to empower yourself and make the necessary changes.

Tip #2: Improve cash flow management

One of the simplest ways a business’ finances can quickly go south is not having enough cash in the bank. Thankfully, it’s also easy to remedy through simple steps and careful management.

Here are some examples which will have an instant impact on the company cash flow:

• Keeping track of the company’s repayment obligations can avoid any late fees that quickly rack up and send the cash flow sideways

• Sending out invoices in a timely manner and following up on late payments from customers can cut down the amount of time between issue and payment

• Reviewing any outgoings and cutting anything non-essential expenses (think magazine subscriptions, or client entertaining) to free up cash

These small changes can make a huge difference in cash flow before it becomes a serious issue in keeping a business afloat. If you’re still struggling, try automating cash flow management with digital tools like Quickbooks or Xero to make your life easier and your business’ finances healthier.

Tip #3: Boost the top line

If you’ve reached a point where cutting back and staying on top of the finances isn’t working, you can start looking at ways to increase sales and boost revenue to put the financials in a better position.

It might feel a bit icky if you’re not used to it, but you’re now a salesperson for your business! Upselling customers on more expensive items and extras to complement their purchase can quickly add up. Far too many businesses are also missing out on the power of cross-selling other products or services, which not only looks great to the customer but can increase revenue.

A bigger business might look to research new potential markets to sell existing products in or new customer segments to target with existing marketing budgets.

If you’re doing a combination of cutting back and increasing the top line simultaneously, then your business will be in a much better position in just a few months. We promise!

Tip #4: Get an accountant

Wait - spending on something else when we’re in a cost of living crisis? It might seem counterintuitive, but hiring an accountant to do the heavy lifting can seriously streamline your existing finances and help set you up for success in the future.

A good accountant is a strategic financial partner with the knowledge and tools for financial planning, cost analysis and cash flow forecasting. These processes can lay out where a company’s money is going, point out inefficiencies and unearth opportunities for cost reduction under a trained eye.

An accountant can also help you take advantage of crucial tax deductions and efficiencies you may not have known about before - always a win-win. The beauty of hiring an external accountant is that you can hire them on a project basis or for certain times of the year to keep costs down, so they can work with you without blowing the budget.

Wrapping up

If your business is struggling in the cost of living crisis, these strategies can quickly make a difference to tide you over until there are brighter times ahead.

If you’re looking for specific advice on your company’s financial needs, get in touch today to see how BXD Accounting can help.