Managing Your Cashflow

6. Controlling Expenditure

6.1 Shop around, so you know the prices and service which you should insist on from your suppliers.

• Consider whether you could make savings by purchasing some types of capital equipment secondhand or on deferred terms, or by leasing them. Always check any tax implications.

6.2 Implement simple cost control systems across your whole business, to identify scope for cost savings. For a start, four types of easy savings can usually be found:

• Overcharging by your suppliers, such as double billing or missing discounts.
• Unnecessary costs, such as heating your premises at night.
• Excessive costs, such as high priced services that can be sourced more cheaply.
• Inefficiency, such as laborious paper-based systems which could be computerised.

6.3 If you hold stock, good stock control can release substantial sums of money.

• Aim to hold just enough stock to service your customers on an on-going basis. Identify seasonal peaks and troughs.
• Set a target stock-turn (eg six times a year), then monitor your performance.
• The faster your suppliers can deliver to you, the less stock you need hold.
• Consider selling off any old or obsolete stock to raise extra cash, as per your ages stock report.