Effective cost management: is it possible?

Any company’s business activities are associated with certain expenses. These may be expenses for buying raw materials, organising the production process, or paying employee salaries. Expenses can be paid even before the firm starts to make a profit, and this process is inevitable.

To achieve financial stability and spend resources efficiently, you must strictly control all expenses and monitor their appropriateness. Reducing unnecessary spending and optimising overall costs are the main conditions for survival in a highly competitive environment. Effective management of corporate costs with expense card issuing can minimise them and give eütra control. It can be done by several methods, which you will learn about in this article.

Where does cost management begin?

It is important to choose the right strategy to achieve the goal. When it comes to effective financial management, first, you need to analyse the current situation with expenses in the company. To do this, they need to be divided into groups. The division is conditional, but the following groups are usually distinguished:

  • raw materials;
  • personnel;
  • associated costs;
  • marketing activities.

For each category, it is necessary to identify the easiest to reduce costs. To do this, you need to prioritise each type of cost. For example, the cost of raw materials will be a very high priority because if you decide to save on this expenditure, it may lead to a deterioration in the quality of the product. Bad goods inevitably lead to lower sales, poor reputation, loss of customers, and therefore profit. Low priority should be given to those costs, without which the company’s viability will not be affected. It may be the cost of bonuses and bonuses for management or corporate events. If the company is in a crisis and needs to reduce costs, the first thing to do is to eliminate low-priority costs.

How to cut costs?

Some fairly simple methods will help you cut costs and still maintain financial stability:

  1. New vendors. We’ve already specified why you should refrain from skimping on raw materials and buy lower-quality ones. But you can still find quality raw materials at a more affordable price. Research the suppliers’ market and find one who offers a better price. If there are no other suppliers, try to renegotiate the existing contract terms with your partner. You can find some compromise and reduce the cost.
  2. Reduce overheads. If you are not a logistics company, you certainly do not need to bear the costs of maintaining your own vehicle fleet. Renting or leasing a vehicle is much more cost-effective. Its owner bears all the costs of maintaining the car, and you only pay the rental cost. You can purchase energy-efficient equipment to reduce your electricity costs. You can also evaluate the size and location of your office. To reduce costs, you can rent a smaller space at a greater distance from the centre.
  3. Outsourcing of staff. It helps you optimize your staff. All functions should be outsourced as much as possible. Employees who perform these functions can be reduced. For example, in small firms, it makes no sense to keep your accountant in the state; it can be hired only for the reporting period. Marketers can also be hired for specific projects rather than paid for their labour permanently. When you hire an employee working remotely, firstly, you pay only for the work done, not for staying at the workplace, and secondly, you significantly expand the geography of staff search.
  4. Using automated systems to control costs. Wallester’s multifunctional platform lets you easily and effectively control and manage corporate expenses. It is enough to issue special expense cards to all employees to build an effective expense management system. They will use them to pay for purchases and services related to their work. It is much easier to control expenses, approve or reject them, and analyse and generate reports through the platform. All information about the company’s expenses is updated online. The platform integrates easily with any software used by the company.

You need comprehensive automated solutions to have as many tools as possible to optimise expenses.

Using expense cards in financial management

The use of expense cards offers the following advantages to those who want to optimise their expense management process:

●        The issuance of cards and expense management are done on a single platform. Cards of any type and purpose can be issued. They can be managed and monitored through the platform;

●        Transactions are monitored online. It ensures prompt evaluation of the budget and its timely correction;

●        Information on all expenditures is received online in a single information field. The finance department can easily select expenditures by a specific department, employee or type of expenditure. It greatly simplifies the reporting process;

●        Easy confirmation of purchases. To confirm a purchase, an employee must take a picture of the receipt and upload it to the mobile app.

Each company chooses the optimal set of methods and technologies for effective expense management. Expense cards and a multifunctional platform for their issuance are universal tools that allow businesses to optimise expenses and increase their efficiency.

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