Let’s not beat about the bush. Cost control and spend management are probably the most difficult things to achieve in a business, no matter what stage of growth you're currently at.
Business owners understand the importance of maintaining a profitable bottom line. This is especially important when you’re a small/medium business. To keep doors open, you’ve got to be sure you don’t ever have a “leaky bucket situation”.
A SmallBizTrends study recently found that 30% of companies surveyed are continually losing money, with another 30% only just breaking even. As a merchant, you need to know how to maximise every penny and control spend at all levels, across all locations/departments/cost codes.
Before you start arguing that your business is fine, under control and you would never be in that situation, just go through these four ways businesses lose money without even knowing.
How many of these apply to you?
1. No process: Business moves fast. In order to satisfy your customers, you need to be pretty sharp and agile whilst delivering the best quality. When a company does not have an efficient process in place, it cannot keep up with digital transformation and market trends. When your process is lacking or hasn’t been updated since the 90s, you are not controlling your spend properly. From price differences between purchase orders and invoices all the way to fraud – without transparency, blackholes appear. Say you’ve negotiated great prices with your suppliers. Maybe even used a great consultancy to do it. But how do you maintain control? How do you make sure those rates are consistently low and the right suppliers are used across the business? Process. Make sure everyone knows the steps to follow and knows the importance of following the right steps. The right process backed by the right people is the key to successful spend magement.
2. Old tech: Let me paint a picture for you here – SAP was founded in 1974 and every “new” update Oracle bring out was created before the very first iPhone. That’s right. Holding on to old technology in a time of accellerated progress is not an intelligent move. Remember the tracking of rates from above? Tech gives you that control. B2B technology is catching up with the power and simplicity of B2C tech. The UX is there, the security is there. Why aren’t you? You must remember technology is never the end goal. It is the means to empower your people and your business to keep safe from fraud and control costs to make your money work for you.
3. Employee training and turnover: Your business may or may not be heavily staffed, but you can still save money by effectively training and reducing turnover. The generation coming into work now is not a paper generation. It is a digitally native generation who will perform at their best on tools that are in line with what they use in their personal lives. The non tech savvy will also greatly benefit from intuitive tools that require minimum training or upkeep. Great tools, effective training and sustained engagement will get you valuable staff. Employee turnover is costly. Human Capitalist found that employee turnover costs three times that person’s salary.
4.Poor customer service: A dissatisfied customer will tell between 9 and 15 people about their experience. Another 13% of unhappy clients tell another 20 people. The ripple-effect from a poor customer service experience will hurt your bottom line. Focusing on customer needs starts from within. You must make sure you have all three: the right price, the right process and the right people.
Time for a good look at your business?
If you think your company could be losing money or might be exposed to invoice fraud - do something about it. Look for information/tools that can actually help you analyse your current setup. Stopping the “leaky bucket” is NOT the hardest thing in the world. The hardest thing in the world is admitting you have a problem then taking the first steps towards dealing with it.
Check out our practical Spend Control Kit where we break everything down into practical tools so that each stakeholder can effectively focus on and implement processes that are easily measured and monitored: