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Category Archives for "Business Tips"

Proving your ongoing business viability through 5 financial reports

Proving your ongoing business viability through 5 financial reports

Proving your ongoing business viability through 5 financial reports

Whether you’re applying for government subsidies, taking out a business loan or seeking investor support, you need to be able to demonstrate your ongoing viability as a business.

To prove this viability, it’s important to have the right financial information at your fingertips. This information is also just as important for your own internal planning and decision-making.

So, where do you start and what are the reports that you’ll need?

The numbers that prove you’re a business with a future

Any lender or government body wants to know that your business has a future.

As the owner, you may believe in the destiny of your company, but you also need the numbers to reinforce this argument. Banks, lenders and investors are taking a risk in backing you. Because of this, they want to know that you’re capable of making the agreed repayments, and that the business is in a financial position to deliver profits and payouts for investors.

Before investing in your business, organisations will want to see:

  • Evidence of a healthy sales pipeline and sales revenue
  • Manageable debt that’s not eating into your capital
  • A positive cashflow position that covers your main costs
  • Forecasts that show stability or growth in your revenues
  • A meaningful business strategy for the next two to five years of growth

The data you need to plan your future

You can’t run a business on a wing and a prayer. With so many different ways to track and record your business data, there’s no excuse for not being up to speed with your performance, your targets and your forecasted sales, cashflow, debt and profits.

This information isn’t just useful when approaching investors and lenders. It’s also vital for your own strategic thinking, your business planning and your internal decision-making

Crucial management information to know will include:

  • Your targets and budgets for the upcoming period
  • Your sales and financial performance against these targets
  • Your basic financial position and health
  • Your forecasts for future sales, cashflow and end profits

The 5 key reports that define your company’s growth

Today’s cloud accounting software makes it a breeze to produce detailed and informative financial statements. These are the main statements and reports to focus on:

Business plan

Your business plan is a written document that outlines the company's goals, strategies and financial projections for future success. It’s your route map for the business journey that lies ahead, and a crucial document when approaching investors.

Sales reports and forecasts

Sales reports give a historic summary of your past sales data, so you can track how you’re performing. Sales forecasts project this data forward in time to show future sales trends and potential sales growth you may achieve.

Revenue forecasts

A revenue forecast is a projection of your expected income or revenue for a specific period. Being able to track and forecast your revenue position is vital information when carrying out financial planning and decision-making.

Cashflow forecast 

A cashflow forecast is an estimate of your expected inflows and outflows of cash over a specific period. By forecasting these cash inflows/outflows you can aim to keep the business in a ‘positive cashflow position (more cash coming in than cash going out).

Financial statements

The main financial statements to keep your eye on will be your:

  • Cashflow statement – shows your current cashflow position, so you can make the most informed decisions about spending and cost management.
  • Balance sheet – shows your present assets, liabilities, and equity. It’s a snapshot that reflects the company’s financial position at a specific point in time
  • Profit and loss statement (P&L) – a breakdown of the income coming into the business, and the expenditure going out. Crucial for managing your profitability.
  • Aged debts – categorises and analyses your outstanding customer invoices, based on when they should have been paid. Keeping on top of this helps to speed up payment and improve your cashflow position.

Talk to us about proving your business viability

Having the data and evidence to prove you’re a viable and stable enterprise is crucial. It’s these numbers that will help you plan your growth and access the investment you need to scale.

We’ll help you create a detailed business plan, revise your strategy and produce all the financial and non-financial statements you’ll need to make informed business decisions.

Get in touch to talk about your financial reporting.

Cost of a new employee

The cost of a new employee

The cost of a new employee

When you’re calculating pay rises, it’s important to think about more than just how much you can afford. You also need to consider the true cost of replacing that employee.

Low pay rises can be unexpectedly expensive

It’s surprisingly common for businesses to offer low pay rises, only for workers to feel undervalued and resign. The employer is left with all the upfront costs of replacing them, plus paying the salary, plus training the new employee and lost productivity as they learn the ropes.

Some estimates put the cost of a new employee at around 40% of their salary and a 2021 Australasian survey put the price at an average of $23,860 per worker.

Overall, that low pay rise could cost your business a lot more than you bargained for.

Not paying enough might just cost you an employee

If you run the numbers you’ll see the impact that an insufficient pay rise can have.

Let’s say you employ Ashley, an office manager who is paid $60,000. You offer Ashley a 4% pay rise, which will cost you around $2,400 more each year. With inflation running at over 7%, Ashley feels this isn’t enough and finds a job paying $68,000 almost immediately.

If you had provided Ashley with a 10% pay rise, it would have cost you around $6,000 more each year and you would still have your employee. Finding a new employee could cost you $20,000 or more.

Running the numbers

Make sure you understand salaries in your industry, and think about inflation, when you calculate pay rises.

Also consider how easy it would be to replace the person and how much value they bring to your business.

And think about extra benefits you could offer a valuable team member: do they want more flexibility or a four-day week?

We can run the numbers for you before your remuneration reviews or if you are looking to hire. 

If you have any questions about pay rises or hiring this year, get in touch – we’d love to hear from you.

Take care of yourself not just your business

Take care of yourself, not just your business

Take care of yourself, not just your business


Being a business owner can be stressful. When the buck stops with you, it can be easy to let the pressure mount up and to discount your own wellbeing.

But taking care of your own mental health is equally as important as taking care of the business.

Research from MYOB showed that 53% of business owners suffer from stress and anxiety relating to the running of their business.  So, what can you do to take care of your own mental health and work mindfullness into your usual life routines?

Ways to nurture your wellbeing as an entrepreneur


Looking after your mental health is as important as looking after your balance sheet. That’s the reality. So, having an improved focus on rest, wellbeing and talking about your struggles is a big part of moving towards becoming a better business leader.

For example:
Don't overwork yourself
It's tempting to work every hour that's available, in an attempt to meet your goals. But working yourself into the ground is, ultimately, a destructive thing to do. If you're tired and burnt out then you're in no position to lead the company. Try to stick to set working hours, and avoid working 60-hour weeks wherever possible. Sleep, rest and downtime are vital.

Schedule time for non-work-related activities
Make sure you have time blocked out for things that aren't work. That might be a walk in the countryside, time with your kids, or a game of tennis. The aim is to take yourself away from the stresses of the business and to give yourself a broader life outside the company. It's a chance to have fun, to relax or to be someone who isn't just 'the boss'.

Take up an activity that promotes wellbeing
There are plenty of pastimes that can help you bring down your anxiety levels and bring you to a calmer place. Yoga is a good way to stay fit, but also an excellent form of relaxation. Equally, finding time for meditation helps you to empty your mind of business concerns and allow yourself to become more grounded and calm. Even something as traditional as a fishing trip could help you to chill out and relax, away from a screen.

Talk about your worries, concerns and anxiety
If business-related stress is building up, the worst thing you can do is keep it all bottled up. It's beneficial to open up and talk about this anxiety. This could be with a partner, a fellow entrepreneur, your accountant or even a professional counselor. Be transparent about your state of mind and you’ll find people are more than willing to listen, understand and offer some support.

Talk to us

As your bookkeeper and adviser, we’re in the perfect position to help you open up about your business worries. We know your business inside out, and we know the common threats, challenges and goals that will be on your mind.

Come and talk to us about your business worries and let us take some of the weight off your shoulders. A chat can be the start of a whole new way of thinking about your own wellbeing.
5 Business Challenges and How to Beat Them 1

5 business challenges and how to beat them

5 Business Challenges and How to Beat Them

Founding, building and growing your own small business is a hugely rewarding experience for many people. But the road ahead isn't always smooth.

There are common challenges that crop up and ongoing issues that need to be factored into your business plan, your strategy and your own personal thinking.

So, what can you do to beat these challenges and make the journey as frictionless as possible?

5 proactive ways to overcome your business challenges

We’d all love to know what lies around the corner when it comes to the future path of your business. The truth is that every business journey is unique. But there are common challenges that every owner-manager or CEO will be faced with – and being prepared for these hurdles is the best way to leap over them and take each challenge in your stride.

We’ve highlighted five common challenges and the simple ways to overcome them:

Uncertainty 

No-one has a crystal ball to know exactly what's coming around the corner. But there are ways to be prepared for some unknown circumstances. You can't fully predict the main external threats like government policy, economic conditions or freak weather conditions. But you CAN use forecasting and scenario-planning tools to build up contingency plans so you have a Plan A, Plan B and even a Plan C. With forecasts of your business data, finances and industry trends, you can be ready to react, pivot and take positive action.

Competition

Small businesses often face stiff competition from larger, more established companies. To stay ahead of the curve, it's important to be nimble and agile. It's also vital to find your niche and to know precisely why your customers value your offering. By ploughing a unique furrow and keeping your customers happy, you can give yourself an edge over larger, slower-moving corporate-size competitors.

Access to capital

It can be a struggle to secure funding as a startup, particularly if you have limited financial resources or a poor credit history. Having a detailed funding strategy is a crucial way to overcome this problem. Keep your finances in order and make sure you have in-depth financial reports to show banks, lenders and investors. It's also helpful to focus on paying suppliers on time, keeping debt levels under control and ensuring your cashflow is in a positive position. These are all excellent ways to improve your business credit rating and show you're a stable, risk-free prospect for lenders.

Hiring and retaining employees

Attracting and retaining talented employees is difficult, especially during the ongoing talent shortage. Offering competitive salaries or benefits packages can be one way to attract people. But it's also important to think about your brand reputation, your sustainability credentials and your CSR policy – all things that Millenial and Gen Z workers value alongside decent pay and benefits packages. Employees want to be proud of where they work, so make your company a progressive, satisfying and rewarding place to work.

Keeping up with technology

Business technology is evolving at a rapid pace. It can be daunting keeping up with all the available apps, tools and software solutions that are aimed at your business. The trick is to be informed but selective about the apps you use.

Start with the operational and financial needs of the business and look for apps that can automate, improve efficiency or provide improved data and management information. Talk to us about implementing the essential apps are in your industry. And do your research and homework before you choose any software solution to add to your app stack.

Talk to us about being an agile small business

Looking to the horizon for the upcoming pitfalls is essential as an ambitious and informed business owner. We can help you generate the most informative management information, to keep you agile and ready for what lies around the corner.

We’re also on hand to discuss your ongoing strategy, how to react to upcoming risks and the best ways to access capital and manage your company’s finances.

Arrange a meeting and let’s see what the future may bring for your business.

12 ways to improve business performance

12 ways to improve business performance

12 Ways to Improve Your Business Performance

Are you looking to improve business performance and take your company to the next level?

We understand the challenges you face in today's business landscape. That's why we're here to help you maximise your business performance with 12 simple yet powerful strategies.

12 simple yet powerful strategies to maximise your business performance

1. Harness Technology

In today's world leveraging technology is crucial for improving business performance.

Evaluate your business processes and identify areas where technology can streamline operations, improve communication, and enhance efficiency.

 Explore the best software applications, automation tools, and digital platforms that align with your business needs. For instance, you can implement accounting software, such as Xero, to streamline financial processes, or customer relationship management (CRM) software to improve client interactions.

By embracing technology, you'll reduce manual work, increase accuracy, and free up time for more strategic initiatives.

2. Eliminate Distractions

Time is the scarcest resource for businesses, so it's crucial to identify and eliminate distractions that hinder productivity.

Start by evaluating your daily activities and pinpoint tasks or meetings that consume excessive time without yielding significant results. Consider reducing standard meeting durations, implementing efficient communication channels, delegating non-essential tasks, and eliminating any unnecessary administrative work.

By streamlining your workflow and focusing on high-value activities, you'll make better use of your time and energy.

3. Say Goodbye to Bad Customers

While it may seem counterintuitive, holding onto unprofitable or troublesome customers can drain your resources and hinder growth.

Take a close look at your customer base and identify customers who consistently delay payments, demand excessive support, or are simply not a good fit for your business. Whenever possible, transition away from these customers and redirect your efforts towards more profitable and mutually beneficial relationships.

This allows you to concentrate on clients who appreciate your services and contribute positively to your bottom line.

4. Invest More

Now that you've freed up time and resources, it's essential to reinvest them strategically.

Consider allocating the extra time towards researching and implementing new initiatives that will enhance your business performance. Whether it's investing in employee training and development, upgrading technology infrastructure, or expanding your product/service offerings, make sure to allocate dedicated time, key personnel, and funds to support these initiatives.

By investing wisely, you'll position your business for long-term growth and success.

5. Get a Plan

A clear roadmap is essential for navigating the challenges and opportunities of running a business.

Take the time to develop a comprehensive business plan that outlines your goals, strategies, and action steps. Start by defining your business's mission, vision, and values, then identify your target market, competitive advantages, and growth opportunities. Break down your goals into actionable tasks with specific timelines and milestones.

Regularly review and update your plan to adapt to market changes and ensure you're on track to achieve your objectives.

6. Reconfigure

Surrounding yourself with the right people is critical for driving business performance.

Evaluate your team and identify individuals who may not align with your vision, show resistance to change, or fail to contribute positively to the company culture. While it may be a difficult decision, consider parting ways with these individuals to create space for growth and success.

By nurturing a team of motivated, aligned, and talented individuals, you'll foster a positive work environment and maximise productivity.

7. Focus on Value-Add

Stand out from your competitors by focusing on providing exceptional value to your customers.

Take the time to understand their needs, pain points, and desires. Tailor your products or services to address those specific needs and exceed expectations. Look for ways to go above and beyond in terms of quality, customer service, or unique features.

By consistently delivering value and making a positive impact on your customers' businesses, you'll foster loyalty, drive customer satisfaction, and generate positive word-of-mouth.

8. Be Different

Differentiation is key to attracting the right clients and employees who align with your business goals.

Identify your unique selling proposition and leverage it to position your business as a desirable choice in the market. Assess your strengths, specialised expertise, or exceptional customer service that sets you apart from competitors. Showcase your unique qualities in your marketing.

By emphasising what makes you different, you'll attract ambitious, growing, and engaged clients who appreciate the value you offer.

9. Deploy Strategic Marketing

Developing a well-defined marketing plan is essential for expanding your reach and increasing market penetration.

Allocate a percentage of your budget specifically for marketing efforts. Leverage a mix of traditional and digital marketing strategies to amplify your brand presence.

By strategically deploying marketing tactics, you'll generate brand awareness, attract new leads, and ultimately drive business growth.

10. Ask for Referrals

Word-of-mouth referrals remain one of the most powerful and cost-effective ways to acquire new customers.

Actively seek out referral relationships and develop partnerships with complementary businesses or industry influencers who can recommend your products or services. Encourage your satisfied customers to refer their friends, colleagues, or business associates to your company. Implement a referral program that rewards customers for successful referrals.

By leveraging the power of referrals, you'll tap into a network of quality leads who are more likely to convert into long-term, high-value customers.

11. Keep on Top of the Numbers

Monitoring your business's financial health and performance is crucial for making informed decisions and ensuring long-term sustainability.

It's essential to have accurate and up-to-date information on your cash flow, revenue, expenses, and profitability. Regularly review financial statements, such as profit and loss statements, balance sheets, and cash flow statements, to gain insights into your business's financial position. Additionally, identify key performance indicators (KPIs) specific to your industry and business goals. These metrics may include revenue growth, gross profit margin, customer acquisition cost, or inventory turnover.

By tracking these metrics consistently, you'll have a clear understanding of your business's financial performance, identify emerging trends, and make data-driven decisions to optimise your operations.

12. Take a Break

As a business owner, it's easy to get caught up in the day-to-day demands and responsibilities. However, it's essential to recognise the value of taking breaks and having time away from your business.

Stepping away allows you to recharge, gain a fresh perspective, and come back with renewed enthusiasm and inspiration. This break can help alleviate stress, prevent burnout, and foster creativity. When you return to your business, you'll have a clearer mindset, improved decision-making abilities, and the energy to propel your business forward.

Prioritise self-care and ensure you schedule regular breaks to maintain your well-being and maximise your long-term productivity.

A holistic approach to improve business performance

Remember, running a successful business requires a holistic approach that encompasses financial management, strategic decision-making, and personal well-being.

By incorporating these 12 tips into your business practices, you'll further enhance your business performance and create a sustainable foundation for growth.

At First Class Accounts Ovens and Murray and Busy01 Consulting, we're here to help you improve business performance. Our expert services in bookkeeping, payroll, app integration, forecasting, and more can streamline your operations.

Let's maximise your success together. Contact us today.

Using data analytics to give your business a competitive advantage

Using data analytics to give your business a competitive advantage

Using data analytics to give your business a competitive advantage

Data analytics is rapidly changing the way businesses are operated. By making use of your financial and non-financial data, you can quickly start to gain a deeper insight into your operations, performance and financial management.

Data-driven decisions are quickly becoming the norm, for even the smallest business. Data analytics allows helps you spot the patterns, understand the data trends, and preview the upcoming threats and opportunities for improvement.

Taking a deep dive into your data

Data analytics has become a crucial tool for small business owners that want to stay competitive and grow their operations in the most informed way possible.

By collecting, analysing and making sense of data, you can gain valuable insights into your performance. This means you can quickly identify the areas that need improvement and the opportunities in the market – while making data-driven decisions about your future

Deliver the best insights from your data

Calculate which data and metrics are most important to the business

What are the key numbers and drivers of success for your particular business? By analysing your data, you can determine which data and metrics are most important to your business and track these numbers in your cloud accounting platform, like Xero, or forecasting app, like Futrli.

Track KPIs in your software stack

Your cloud-accounting platform can provide a dashboard that shows all your performance indicators (KPIs) key in one place.

To add to this, you can also integrate with industry specific or tailored reporting apps to create detailed management information and reports. Talk to us about integrating the appropriate apps for your business to help you dive into your data.

Tracking and reporting on these key numbers helps you analyse your data, create detailed breakdowns of your business information and monitor your sales, business and financial performance in real-time.

Look for the patterns and opportunities in the data 

What you’re looking for in your data is the trends, patterns and insights that will help you become a better business.

Pull out the trends in your customers’ behaviour, spot opportunities for growth and optimise your operations, to help push the company towards success.

Non-financial data about customer behaviour and experiences can also be invaluable. When you know your customers expectations and spending habits, that gives you the foundations to tailor your products and services to their needs. It also helps drive sales, revenues and get a better return on investment (ROI) from your operations.

Use AI to analyse your data

With the help of artificial intelligence (AI) and machine-learning applications, you add the ability to sift, filter and compare your data in superhuman ways.

AI can process and analyse data at a speed and volume that would be impossible for a human being. Software can measure progress towards goals or detect variances in budget numbers, flagging up these insights as notifications in your dashboards and management information.

Keep yourself ahead of the competition

With the right smart data-analysis tools at your fingertips, you’ll make informed decisions that help you stay ahead of your competitors and new entrants.

These apps and tools help you identify new market segments, spot opportunities for growth and optimise your operations to stay competitive in the market. In the fast-moving digital age, keeping on top of your data is the fastest way to give your business a much-needed edge.

Talk to us about integrating data analytics apps in your business

Data analytics is an essential tool if you want to stay competitive and grow your operations.

We’ll help you integrate the appropriate apps to track the right data, produce the most insightful management information and deliver the insights for your business.

Whether your goal is improved business outcomes, cost savings, increased revenue or improved customer satisfaction, we’ll help you delve through the data and make informed decisions that will drive the future of your business.

2024 planning

Is your 2024 planning leading you down the right path?

Is your 2024 planning leading you down the right path?

We’ve highlighted 5 important elements that your 2024 strategy needs to focus on.

As a business owner, CEO or managing director, it’s important to look forwards. Your job is to guide the course of the company and to provide the roadmap for a successful year.

But navigating the hurdles and driving the business to success is never easy – especially when you’re confronted with a market and economy that’s still in a state of recovery.

A business plan that’s tailored to your key 2024 challenges

So, what are the current and potential risks that you should be planning for in 2024? And how can you use innovation, leadership and forward-planning to sidestep these bumps in the road?

Key items to consider in your 2024 strategy include:

The impact of a global economic crisis

The business world has bounced back from the pandemic, but there’s no escaping the fact that we’re still facing a global economic crisis that looks to continue into 2024.

This means markets are slow, prices are high and keeping the lights on in the business is a challenge. This is the reality and it needs to be reflected in your goals, targets and long-term plan for the year ahead.

Finding new ways to overcome the supply chain crisis

While there are signs that global supply chain issues are recovering, finding the products and raw materials that you need can still be difficult.

Ocean freight is still slow and the logistics of getting goods from A to B is a risk that should be built into your planning. Where possible, it’s sensible to source local suppliers. This helps cut down on logistics times, reduces costs and makes your supply chain strategy more sustainable.

It’s also worth shopping around for the best deals, so you can source goods at the lowest possible prices.

Locating the right people during the ongoing talent shortage

Your people are a vital part of your growth strategy. So, when there’s a shortage of talent that can really hold back your plans.

To fill those roles and keep the company running smoothly, it’s a good idea to broaden your net. Think about promoting existing talent from within the business, or putting word out through your network that you need experienced new hires.

Using contractors or freelance workers can also be a good short or medium-term solution if you can’t locate the right permanent employees.

Embracing the very best in new technology

Business software solutions have jumped forward in leaps and bounds in recent times. Working the latest cloud apps, automation tools and AI solutions into your strategy can quickly give your business a competitive advantage. 

If there are manual tasks in the business that can be automated and tracked via software, get them automated ASAP.

Smart use of automation can speed up your productivity, boost efficiency and free up time for you and your team to focus on higher-value tasks – like business development, sales and customer service.

Talk to us about integrating apps into your business.

Learning to pivot when new opportunities arise (or threats appear)

Building agility into your strategy and 2024 planning is a must.

We live in unpredictable times where new opportunities can appear overnight, and unforeseen threats can rear their head without warning. Your business needs to be able to pivot, refocus and quickly adapt to these changes.

Planning out multiple ‘what-if scenarios’ can help you try out scenarios and pull together multiple strategies.

Talk to us about a review of your 2024 planning

Keeping your business plans up to date and refreshed is a big part of keeping your company ahead of the competition. We’ll help you review your 2024 plan and find the areas where you need to tweak, upgrade and refocus your strategy and targets.

Applying for a business loan

Applying for a business loan

Applying for a business loan

Applying for a business loan can be a daunting task, especially with all the paperwork and number-crunching involved. However, it's important not to take lending lightly, regardless of how easy it may seem to take on debt.

At First Class Accounts Ovens & Murray, we understand the challenges that business owners face when seeking financial assistance. So today we're sharing some valuable insights and tips to keep in mind throughout the business loan application process.

Present a clear business case

While banks are experts in money, they’re not necessarily knowledgeable about your area of business.

It's crucial to present a clear story that connects the dots for them. Show the bank how the loan will unlock business growth, ultimately ensuring that they will be repaid. By presenting a compelling business case, you can make the bank's job easier and increase your chances of securing the loan.

Essential documentation

To support your loan application, you will need to gather certain documents that demonstrate the financial health and viability of your business. Make sure you have the following:

Income statements and balance sheets 

Provide financial statements from the past two years to showcase your business's financial performance.

Up-to-date financial statements

Keep your financial statements current and accurate. These documents reflect the financial position of your business and help lenders assess its stability.

Business plans or project plans

Outline the direction your business is taking, including your growth strategy, market analysis, and future plans. This will demonstrate to the bank that you have a clear vision for your business's success.

Tax returns 

Provide recent tax returns to verify the accuracy of your income statements. This helps the bank evaluate your income stability and repayment capacity.

Bank account statements

Include bank account statements to validate your business's financial transactions and cash flow.

Leveraging accounting software

Using cloud-based accounting software, like Xero, can significantly simplify the loan application process. These platforms generate comprehensive reports and financial data on demand, providing essential information to support your loan application.

With features such as income and expense reports, growth trends, and forecasts, you can present a well-rounded picture of your business's financial performance and potential.

Talk to us when applying for a business loan

Navigating the complexities of the business loan application process can be overwhelming. At First Class Accounts Ovens & Murray and Busy01 Consulting, we are here to support you every step of the way.

From organising your financial documents to analysing your business's financial health, we can help position your business for success. 

Secure Your Business Loan with Confidence

Applying for a business loan requires careful preparation and attention to detail. By presenting a clear business case and providing comprehensive financial documentation, you increase your chances of securing the loan you need to take your business to the next level.

At First Class Accounts Ovens & Murray, we understand the unique challenges faced by business owners, and are here to assist you throughout the loan application process.

Contact us today to get the support you need and put your business in a better position for success.

Getting more from your procurement spending

Getting more from your procurement spending

Getting more from your procurement spending

Keeping the wheels of your business turning can be expensive. As part of your ongoing business cycle, you’ll need to buy the goods and services that keep you operational. This might be subscriptions to business software, raw materials for production or even accounting services.

But if you’re going to get the maximum value from this procurement process, it’s important to be fully in control of what you’re buying and how you manage these costs.

Managing your procurement in tough economic times

There’s no escaping the fact that cashflow is tight for many businesses at present. Globally, we’re experiencing a worldwide economic slowdown, alongside the pressures of a supply chain crisis that has pushed up prices and reduced margins.

Because of this, it’s important for you to keep a close eye on your procurement, so you can find the best prices, strike the best deals and keep your business in a positive cashflow position

If you’re using the most expensive logistics partner, or spending too much on raw materials, this can start to have a big impact on your profitability and your ability to grow.

5 key ways to enhance your procurement spending

Keeping your business in a positive cashflow position is all about ensuring your cash inflows (your income) outweigh your cash outflows (your costs).

When your procurement costs are high, it makes it a real challenge to maintain this positive cash position. The answer is to examine your spending and to proactively reduce your costs, improve your supplier terms and generate a tighter and more effective procurement process. If your procurement process helps you cut down on your spending, you’ll also improve the overall financial health of the whole business.

Here are 5 key ideas to help you get in control of your procurement:

1. Reduce your base cost per item

If you buy goods into the business, it’s important to think about your basic cost per unit. Your unit cost is difficult to control, but there are ways to reduce it. Try getting multiple quotes from a variety of suppliers so you can source a provider that offers the best mix of value, quality and reliability, at an economical price. Negotiation can also be an effective way to bring prices down.

2. Cut your logistics and delivery costs

Physical goods have to be transported to your premises and to your end customers. These logistics costs are an integral operational expense, but they can still be reduced as part of the procurement process. Search for carriers and logistics providers that offer the services you need and then see if they open to negotiation on prices. Ask if discounts are offered if you offer shorter payment terms or if you join a preferred customer program to help reduce prices.

3. Nurture the best supplier relationships

Nurturing good relationships with your suppliers sets the best possible foundations for your procurement management. Building that stability into your supply chain deepens trust and makes it easier to negotiate favourable terms. Put some effort into nurturing good relationships with your supplier and make sure you always pay on time. This helps to build a good reputation with your supplier, making your procurement process simpler and more cost-effective.

4. Reduce tax and duty costs

Whether you’re selling nationally or across borders, there are likely to territory-specific taxes and duties to pay when buying and transporting your goods. Working with a tax adviser who knows your industry and/or territories helps a great deal. They can check you’re paying the right taxes on your goods/services and that they’re correctly categorised for taxes like VAT or GST. Working with a customs broker also ensures you pay the correct duty on all your imports and exports.

5. Using tech to get in control of procurement

Business software is transforming the efficing of procurement. There are plenty of cloud-based procurement solutions available, giving you the benefits of 24/7 accessibility in the cloud and one point of truth for all your procurement data and reporting. This helps to streamline your internal processes, manage risk more effectively and keep a close watch on spending against budgets, cashflow and expected expenditure. By keeping yourself informed, you can manage your expenses by putting caps on spending, or switching to new suppliers that can offer you a better deal or cheaper prices.

Talk to us about your procurement management.

Taking the time to improve your procurement management is a no-brainer in the current climate. You’ll improve your cashflow, supplier relationships and your ability to ride out the slowdown.

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