Mixed news headlines about the state of the economy have many small business owners looking for innovative cost saving ideas that don’t impact the customer or employee experience. Many entrepreneurs are responding to market uncertainty by looking for ways to scale back — while avoiding changes that may cause customers to leave for a competitor. A recent report by McKinsey warns that consumers are switching brands at unprecedented rates, incentivized to change their shopping behaviors due to economic pressures, store closings, and changing priorities.
Ideally, the best cost saving ideas empower merchants to continue operating their business as usual. This means finding new ways to work efficiently, cutting down on waste, and eliminating low-value activities. Here are a few concrete actions you can take to implement innovative cost saving ideas.
Use tools to automate the manual, time-intensive parts of running your business, such as accounts payable. By adding automation, you can free up your staff for more high-value tasks, reduce costly errors, and create more consistency in your operations.
One area ripe for automation is accounts payable. Depending on the size of the company, it can take up to 25 days to process a single invoice. Businesses risk incurring late fees, damaging their relationship with vendors, and other costs when invoice processing takes nearly a month.
Glean AI is able to read all the line items in an invoice, thus eliminating manual data entry and automating what is otherwise a time-intensive, error-prone process. Glean AI also offers reporting functions that empower your employees to renegotiate better terms with vendors and find even more cost savings.
One of the most common cost saving ideas is to pay attention to your vendor agreements. Spend control — the process of monitoring and managing purchasing across the business — is an important way to make sure you’re controlling how much you spend in pursuit of providing your product or service.
When integrated properly, spend management tools can help businesses cut overall annual expenditures by 5% to 10%. Tools like Glean AI help accounting teams to review invoices and make quick financial decisions on the spot. By centralizing vendor data, teams can align quickly on budgets and seamlessly collaborate on spend decisions. Plus, Glean AI's proprietary benchmarking data empowers your company to negotiate better deals with your vendors and drive increased spend efficiency.
When your accounts payable team receives the same invoice twice, or two invoices for the same payment, it can cause a host of problems that ultimately impact your bottom line. As far as cost savings ideas go, rooting out and eliminating these types of hidden costs should be at the top of your list.
Research found that the typical small business pays 450 invoices a month with a 1.29% duplication rate – about six duplicate invoices a month. The average amount on those invoices was $2,034, meaning that these small businesses are losing about $12,000 per month if each duplicate invoice is paid.
To begin eliminating duplicate invoices, implement an intelligent spend management platform that can flag instances of potential double invoicing. Glean AI alerts users when possible duplicate invoices have been received, using advanced analytics to study invoice timing and alert users accordingly. The platform can immediately stop the suspect invoice from being paid and prevent the possibility of invoice fraud.
This is one of those money-saving ideas for companies that can be a win-win for the business and its employees. A recent McKinsey survey found that 58% of Americans have the opportunity to work from home at least one day a week; of those who have the option to work flexibly, 87% take it.
Remote work can save your company money in a number of ways. First, it allows you to downsize or completely eliminate your office space, saving money on rent, office supplies, electricity, equipment and furniture, and other utilities.
Offering remote work as a benefit can also help you with employee retention; employee turnover is one of the biggest costs impacting a small business. And, remote work can also help you save on salary and employee benefits. With access to employees from all over the world, you can gain access to experts in countries where the cost of living is less and a lower salary is still considered generous.
Startups looking for innovative cost saving ideas might consider fractional hiring: the practice of hiring an employee for a “fraction” of the time a normal employee would work. This person spends more time with your company than a typical freelancer but may have other companies for which they also serve in a fractional capacity. The Chief Financial Officer role is a prime candidate for fractional hiring, but your startup can hire fractionally for virtually any leadership position.
Fractional hiring provides a way for a startup to tap into advanced expertise at a lower cost. This approach allows an expert to become familiar with your venture over time, investing more time and attention to your business than a freelancer who would only care about completing the scope of work.
Green initiatives are cost savings ideas for businesses that resonate with customers and employees. Small changes can have big net savings: for instance, LED bulbs can save you three-quarters of your lighting bill per year. Consider installing a smart thermostat in your office. “Nest users saved an average of 10% to 12% on heating and 15% on cooling — $131 to $145 per homeowner,” wrote MoneyCrashers.
Another option is to go paperless. Reducing paper at your company can cost thousands of dollars, from paying a supplier, the cost of the paper itself, and potential mailing costs, according to one estimate. Using an intelligent spend platform to reconcile invoices and pay bills online makes it easy to save trees — and money. Plus, you can encourage your customers to follow your lead.
To learn more about spend optimization and Glean AI, request a demo, today.