According to the Chartered Institute of Marketing Accountants UK (CIMA), one of the most overlooked techniques for business success is handling of cash flow effectively. In business speak this is referred to as cost management.
The Association of British Insurers (ABI) refers to cost management as the process of planning and controlling your business budget thus reducing expenses. This process involves collecting, analysing and evaluation of information related to costs and taking a proactive strategy in reducing such costs.
Applying Cost Management Techniques
Well, enough of the definitions; the question becomes which techniques you can use practically to reduce the costs of running your operations. Here is a brief overview of some:
Leveraging on technology
The world today is undergoing a technology revolution and you can capitalize on this to improve efficiency thus reducing costs. All areas of business practice can benefit including customer service where a Customer Relationship Management (CRM) system comes in handy.
Such a system ensures customers get better service thus earning their trust. With more customer retention comes higher productivity. Other areas include data storage through cloud systems instead of traditional data storage hardware. You can also reduce costs of communication by using social media platforms and other forms of new media such as e-mail.
With new media tools, it is possible for you to get cheaper services from other professional entities both local and foreign. You can for instance outsource your database management, call centre services among other IT related aspects of your operations.
Efficient Time Management
CIMA also reckons that poor time management is a pitfall of most businesses. You should train your employees on effective time management and ensure they are on track throughout the day. Using tracking and management systems, you will be able to note anytime your employees are not working.
If you are leasing warehouse space, you need to maximize on it. You should only have products that are moving quickly while others ordered for appropriately. This calls for a reassessment of the inventory to keep up with current demand and supply.
Your financial records must always be up-to-date. This will ensure that your projections are right in order to avoid shortfalls. All financial expenses need proper tracking preferably using an accounting system for easier auditing. This will reduce any chances of losses along the chain.
As they say, in business simple does it and as you can see these cost management techniques can easily be applied to any business. More importantly keep yourself updated on any changes in your market.