Companies are under increasing pressure to cut costs, especially as the consensus now seems for tax hikes in this month’s budget. This will come on top of the repo rate having being increased to the point where the prime lending rate is now 10.25 percent.
However, with cost cutting and the need to implement efficiencies comes the very real risk of cutting the meat out of a company, leaving it unable to perform optimally.
The current trend seems to be to cut out employees and to expect more from the remaining team members. But instead of cutting out staff, which often results in other valuable employees getting cold feet and leaving, companies should have a close look at their fixed operating costs. Very often there are expenses that a company takes for granted that they don’t realise can be cut.
For example, bank charges are often seen as a necessary evil. Yet, these expenses can often be negotiated, or a trusted outsourcing party can be brought in to deal with that administrative aspect to trim costs. Do, however, be wary of which company you sign up with. Check whether the service provider charges annual user fees, monthly subscription fees and support fees.
Using accounting software designed for owners who are not financial experts offers full visibility over operations. Using software that lives in the cloud, and reconciles payments received against invoices, enables access from anywhere, and a real-time view of what’s in the bank, and how much is due.
In addition, a company can cut the transactional bank charges it pays to process salary payments by using a trusted payment service provider.
Payment service providers process thousands of payments on behalf of other companies and, because of this, receive a better rate. These savings are then passed on to clients.
Depending on the service provider you use, you can save you up to 70 percent of the cost of running salary payments which can add up to a substantial amount.
For example, a company with 40 staff members can cut the transactional banking cost of processing salary payments from R1 500 a month down to just R500 a month, by simply outsourcing its EFT payments. While R1 000 a month might not sound like a lot of money, it all adds up. And, given that it’s a simple process to sign up for, it’s certainly a “quick and easy” way to save at least R12 000 a year.
Many payment service providers offer audits on potential new clients’ monthly transactions and provide a quote upfront before a client switches over – so if you think your business is paying too much on transaction fees, investigating and contacting a payment service provider would be worthwhile.
In today’s economic environment, companies need to do everything they can to boost productivity, grow revenue, and protect the bottom line; cutting out hidden costs is an easy way of saving money that can help you grow your business.
By Andries Kok CFO of PayAccSys