Managing costs within your company should be a high property. Without any proper control of what you own, spend, or your income vs outgoings, you won’t be able to have a proper handle on your finances, and everyone knows what happens when you don’t have control over business finances. The stark reality is that 82% of businesses fail due to poor cash flow, and many small businesses say cash flow is their biggest struggle. And this can, in part, be down to how they manage their finances, not simply because they’re not making enough money.

Managing costs and cutting costs are two different things. By effectively managing costs, you can also indirectly cut costs by reducing the need to pay out more because you know exactly what is going on and can budget accordingly.

Implementing the correct software and practices can allow you to manage costs and avoid spending more than you need and wasting money.

Asset Management

Asset management software allows you to input and track all of your assets. Maybe you have remote teams, and you’re expanding quickly and buying inventory to cope with increased staffing levels and demand. How are you keeping a check on what you have and avoiding it disappearing, meaning you need to replace it? If this is an issue or you want to prevent it, utilizing asset inventory management can help you to keep things under control so you know exactly what is going on, where everything is, and what you have to avoid repeat purchases.

Plan Your Budget

One highly effective method of cost control is to take the time to plan your budget and spending for projects effectively. You need to sit down and predict any upcoming costs associated with planned work or events you have coming up.

It’s not good guessing or estimating what you might need. You need accurate predictions in place to help you plan your budget accordingly. Then, to account for any variations, having contingency funds or an additional budget set aside for this reason will help you avoid overspending as much as possible and dipping into funds allocated for different purposes.

Expense Checkpoints

Expense checkpoints are, well, points throughout a project, allowing you to check your expenses so far. This allows you to see how money is being spent, what, and how much you have left to complete. You can assess if you can reduce the budget or if it needs increasing and identifying waste in said budget. Leaving your expenses until the end can see you waste money if people aren’t being careful with spending and budgets, and this can have massive implications for you in the long term. Set your checkpoints weekly or monthly as per the project’s length and the team’s capability, and review them regularly to stay in control.

Change Control Systems

What change control systems do essentially is account for any changes to the budget that might crop up once work has begun. It could be an increase in labor, a rise in the cost of materials, correcting mistakes, or uncovering issues that need to be dealt with before you can proceed.

Having systems in place that will accurately record changes and increases in costs can help you to budget better and remain in control at all times if you know exactly what is being spent.

Time Management

Time is money, as they say, and if you’re not sticking to timelines and deadlines, then you are simply wasting money. You need to implement practical and realistic timelines so everyone can achieve the work required to the right standards without rushing and making mistakes or going over projections. Without a clear set end date in place, teams might take liberties with how long a project takes to complete, causing costs or a spiral. Utilise time management techniques to help you stay in control of costs and avoid things running over budget.

When it comes to managing your finances as a business owner, you need to be proactive, not reactive, and ensure that you have policies and procedures that allow you to track the movement of money in and out of your business and identify areas of waste to avoid your having to spend more than you need to.

From implementing time tracking software and inventory management systems, having expense checkpoints, and planning your budget accurately, you can improve your finances and ensure that nothing untoward is going on and your finances are being used correctly, giving you the best value for your spending.