Recessions are an undeniable part of our economic system. And the one certain thing is that they will come. Part and parcel of these periods is that companies less able to compete are left by the wayside. Only the strong are left to survive. With the global recession we are now living in set to be one of the worst in a generation, it's inevitable that there will be alot of companies going belly up.Now, more than ever, it's crucial to do everything you can to stay competitive.
Reducing Expenses
The first question any business will ask in times of recession is "what can I afford not to spend money on". The most common reactions are job cuts, reduction in marketing and advertising spend and cutting back on direct costs. There's one problem with this method of slashing expenditure, however. They almost always have bad side effects. This means a shrinking of your sales and turnover, as well as other potentially negative effects like reducing the morale of your staff. This is not a revolutionary idea by any means. Often these risks are identified and managed in advance. But what if there was a way of cutting out expenses that REALLY are unneccesary, without adversely affecting your business at all?
Money Down The Drain
You can pretty much guarantee that most businesses will have a certain amount of wastage in their expenditure. To a certain extent this is unavoidable. But a lot of this comes from accounting inefficiency, especially when it comes to costs related to your fixed assets – such as equipment, machinery, computers, vehicles, and so on. By correctly auditing these erroneous expenses it's possible to keep these costs to a minimum. Best of all, these savings do NOT result in any reduction in output. Here are some examples of common channels where businesses are over-paying on their assets:
- Inaccurately measruing depreciation value on assets. This is a common oversight that can result in overpayment of taxes.
- Lost and stolen assets. The larger the organisation, the more of a danger this can be, unless you have a decent asset tracking system in place.
- Paying too much for your insurance premiums due to incorrectly valued equipment.
- Unneccesary purchases. It's common for unneccesary equipment purchases to occur when there isn't proper tracking of assets in place.
You may feel like these are minor leakages in your expenses and addressing them won't make much difference. That attitude is extremely common amongst businesses small and large. When you add all those small costs, however, you end up with a potential lifesaver when margins are as thin as they are now. Just getting the right asset accounting in place could mean the difference between success and failure in 2009.