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Incurring expenses is regularly the focus of many business owners. Generally because it's the easiest and most illustrated thing to look at. However, there are other considerations for controlling costs. The first one is to look at how you administrate the flow of money overall. By this I mean your budgets.

I want to reiterate that if you spend the time upfront defining your budgets, then it's a lot easier to administrate the costs that are incurred down the track. It also allows you to then delegate the management of this process to the bookkeeper or financial controller.

1) Top Tip: Implement A theory That You Only Pay On buy Orders
One of the most effective ways to control costs is once you have your funds defined, is to then implement a theory where you Only pay invoices on buy orders. This will stop employees ordering willy nilly in its tracks. Because as soon as you issue the edict to staff, you make sure that the accounts citizen Only pay where a buy order is quoted.

For staff to spend money, this means that they have to invite a buy order from the accounts person. They would then check the funds to make sure that the number is allocated, and that the person ordering the goods is authorized to make the order. If the write back is yes to both of these, then the accounts person would issue a buy order which the person ordering the goods when then quote.

So when the invoice is received by the accounts person, they would then check that the goods have been delivered and that there is no outstanding issues to resolve. They would then get ready a cheque or online transaction for payment.

If there is no buy order assigned, then they would refer it back to the victualer and/or the staff member who ordered the goods to resolve. I advise being tough here - if its not assigned, then you don't pay. It's then up to the employee to decree the list - well essentially you probably would, but when there's a perceived consequence, it regularly puts the fear of god into them! They regularly don't spend your money again after that scare!

2) Value For Money
One of the areas that most business owners are regularly fairly comfortable with is controlling costs. But let's just go over the basics again. As a business owner, you should set a key performance indicator for your financial controller to be responsible for value for money. This means continually finding for distinct and innovative ways to control costs as a way of impacting your business' profitability. A dollar saved as a cost, goes directly to lowest line profitability. Some businesses find that by implementing tight cost controls and questioning the need for all spending has achieved the same profitability revision that would otherwise have had to come from a substantial increase in sales.

Now I'm about to briefly go straight through a checklist that is ready in the 'Essential Financial management Templates' workbook which you can buy from our website.

3) Shop around For Deals
The first rule of thumb is to shop around. No matter who I'm dealing with, whether it's a good friend or colleague that's providing the service, I always collate it against two other quotes. Now, I regularly don't go straight for the cheapest option, but it does allow me to then go back to the customary person and have an open and honest conference about reducing the customary cost. I always think about a commentary one Nasa astronaut once made when being asked about his feelings about being in space on a new space shuttle for the first time. His reply was, "how would you feel if you were about to fly in craft millions of mils into space, where your shuttle protection is thoroughly reliant on our governments procedure of sourcing the cheapest part possible." Point well taken. It's not always about going for the cheapest option, but it is about ensuring that you're getting value for money.

4) collate Actual Costs To Your Budgeted Costs
Another point is to always recapitulate costs on an ongoing basis. I would advise monthly - lets not wait until the end of the year or when we're in strife, we should always be focused on ensuring that we're getting value for money at all times. When you are going straight through your reports with your financial controller, use this as a time to look over your costs and collate them to your budgets.

5) Think face The Box To consider Other Options
Also be sure that you're aware of what's happening in the market place. Is there a new player who can supply contentious prices, or is there an online selection ready to you. Maybe even a global possibility for you to explore. I'll give you the example of a website. I had a friend who rung me to ask my idea about a quote she had received on building a website. The quote was for ,000. I referred her to a website called elance.com that has a global online bidding community. She settled a task brief for person to build her a website and ended up getting one built for 00. She was delighted with the quality and the end corollary - the only thing she did say was that she had to spend more time communicating with them (as they were overseas) but she was happy to do that to save herself ,600!

6) Continually recapitulate Your appropriate Providers For The Best Prices
Are there areas in your expense items that are being deregulated or additional players advent into the market. For example, electricity or gas providers, telephone providers, etc. You may be able to save money by consolidating accounts on your movable phone bills. There are also telco providers that unmistakably supply a free estimate assistance to see where they can save costs for you - use them!

7) recapitulate Electricity Costs With An vigor Audit
And while we're on electricity costs, have you conducted an vigor audit in your business to ensure that you're not needlessly wasting money? For example, some vigor discount strategies could contain turning off lights in offices that are not being used, or turning off the air condi8tioning system, photocopiers, printers and computers at the end of the day. Is there the inherent to use electricity in "off peak" periods. Put timers on plant and tool and put signs around your business reminding citizen to turnoff the lights and to save energy.

8) Reign In The writing materials Bills!
One of the biggest expense items in a business can be stationery. A lot of business owners won't pay a delivery payment to their business, but they will send an office person to pick up the stationery, at -30 an hour, plus allow them to buy "whatever they need". Have you ever tried not to buy an impulse item at a writing materials store? It's impossible - take it from person who knows! Look also at the purchases that are being made in small quantities - can money be saved by purchasing in bulk - especially in printing. Make sure that one person only has the responsibility of purchasing writing materials and ordering printing so that its not open slather of everybody in the business and they can also make sure that the items are unmistakably required.

9) build A voyage Policy
Do you have a voyage procedure in your business? If so, it should clearly figure the class of air travel, grade of hotel accommodation and what expenses can be incurred and reimbursed. There are numerous accommodation site ready now days that allow last miniature bookings at a greatly reduced cost - have a look at wotif.com to see what I mean. Using this site means that you can unmistakably book staff into 5 star accommodation at 3 star prices.

10) Check Bank Charges & Fees
Also consider bank interest, fees and charges - these should be checked regularly as banks often make mistakes in charging fees and interest. You should also declare a article to interest rates and margins quoted by banks and shop around for the best interest rates.

11) recapitulate car Allowances
Vehicle allowances are also someone else area of costs that can rack up pretty fast when employees cotton to the fact that they can receive a nice miniature earner using the Ato car discount figures. If you have citizen using their vehicles a lot, you may want to consider whether you buy or hire a pool car. Often the number of money that you can spend paying car allowances can unmistakably pay off a business car - therefore building your assets at the same time. someone else way to hand this is to offer to pay for all petrol costs instead. So all an employee fills up, they just need to hand you the receipt and they'll be reimbursed in full. This still adds up economy than paying a car discount - and is easier to funds for in your behalf and loss projections.

Another way to additional streamline this process can be to have fuel cards that link into a singular list that you pay each month.

12) build Boundaries For employee expense Reimbursements
Always build the boundaries for expense reimbursements in your business. Integrate this into your induction program in your business so that everybody is extremely clear of the expectations. This is particularly relevant if you have a business development person who wants to have an "entertaining" budget. I regularly empower citizen in this regard by providing them with a profitability target on sales made - which incorporates things like their entertainment budget. But more often, I'll act6ually sit with them and run straight through ways to supply inherent clients with value, without expenses "wining and dining" experiences. In fact, in my It days, where everybody apart from me had a corporate prestige card for "smoozing". I was more effective with my sales because I would take citizen for a coffee.

13) Make Sure The Invoices You Pay Are Correct
Advertising is someone else area where businesses can incur lots of charges. I've covered off on advertising in someone else Cd in the Jump Start Your business Series, but one thing I want to mention here is taking care with "bogus" invoices for advertising and checking that all invoices are unmistakably for valid advertising. Now if you have a buy order theory or a centralized purchasing process, then you won't get caught out on this one. But a few years back there was a scam where citizen were receiving invoices for "advertising" and then pressuring the accounts payable staff to pay them. A nice miniature earner made from the lack of internal systems in 99% of companies.

14) Beware Of Overcharging!
I want to conclude by talking about overcharging and the need to always check invoices against contracts or agreements. This includes rental agreements, any victualer invoices, etc. If in doubt, don't be shy of request the victualer to supply more details or query any inconsistencies. Errors are unmistakably made and regularly suppliers are extremely apologetic should a unlikeness be discovered.

15) Ensure That Your Petty Cash Has A Monthly Limit
Despite your best planning, there will be cases when you need to have way to some petty cash - that is small amounts of cash for purchases that are fairly minor and random.

Make sure that the preliminary petty cash number is realistic - if it keeps exceeding the number each month, you need to build where the cash is being spent and then put alternative strategies in place. However, I would strongly advise setting a monthly limit that staff are aware of - for instance set a monthly number of 0. Once it's exceeded, it's exceeded.

Taking time to reassess your costs will have a direct impact on your lowest line. However, be truthful that you don't focus more on cost minimization than opportunity creation. It's easy to cut costs, but downright difficult to create more income. So be sure that your concentration is focused in the right direction.