Cut costs to maximise cash flow - Barr

Barr

According to Michael Barr, chairman of SureTransact, an innovative mass electronic payment provider, in order to manage cash flow effectively, it is important to always be fully aware of the various monthly company costs, as well as the unnecessary expenses which could be cut in order to save money.

Gerrie van Biljon, executive director of Business Partners Limited, says that a common downfall for companies, from small enterprises to large entities, is poor cash-flow management: "Cash-flow management is a key challenge and companies need to manage their cash flow according to the sector they operate in by taking into account the challenges they could, and are likely to, experience."

Cutting costs

Businesses are often unaware of smaller, less significant costs which they may routinely pay each month, such as additional electronic transactional banking fees. "While these costs may be minimal, they accumulate to large sums of money over long periods of time, and could be put to better use, such as reinvesting into the business," says Barr.

Barr refers to a recent independent survey commissioned by SureTransact, which revealed that 51% of businesses do not know whether they are being charged additional electronic transactional banking fees for EFTs such as batch upload fees, beneficiary amendment fees, or viewing fees for online platforms.

He says that this is just one example which highlights how additional, and often unnecessary expenses, can slip through the cracks: "Cash flow difficulties are generally one of the most devastating challenges for small businesses, and ultimately affect a business' bottom line. By eliminating unnecessary costs, businesses may be able to ensure higher profits."

Barr offers five tips, which may assist businesses to save on their financial costs:

1. Be informed of your options: Some companies offer their clients discounts for early or advance payments, or a bundle package which could be more cost-effective for the business. By enquiring about the various options available, businesses may find that they qualify for a discount if certain requirements are met. It is therefore important to discuss these options with suppliers and service providers to evaluate whether it is feasible for the company.
   
2. Account for all costs and be aware of hidden costs: All statements and bills should be examined with a fine-tooth comb to ensure that businesses are only paying for the absolutely necessary services. For example, ensure that the business is not paying for a premier service when the standard option will suffice. Also ensure that there are no hidden or extra costs charged for a service which may not be necessary, such as additional admin costs.
   
3. Shop around for competitive rates: Due to the constantly changing environment, businesses ought to constantly be searching for better deals, especially in highly competitive industries such as the banking and insurance sector. Businesses should shop around to find out what competitors in these industries are offering and if a competitor's price is lower, a supplier may potentially negotiate their current rates.
   
4. Ensure all electronic payments are streamlined: Businesses should plan their online banking transactions so that they are streamlined and take place during one or two set periods during the month. Many businesses do not realise that they are charged for logging on to an online banking portfolio and charged for each batch of payments.
   
5. Make use of platforms that can minimise costs to the company: Often utilising one central platform, instead of going through various different suppliers, can cut significant costs for a company. Banking costs can be a significant cost to businesses and making use of a platform, such as SureTransact, which develops, provides and supports electronic fund transfer (EFT) processing for businesses, can enable a business to potentially save up to 60% of electronic transactional banking fees.
   

For further information, go to www.suretransact.co.za.