10 Ways to Cut Finance and Procurement Costs Due to COVID-19
Even though many businesses have started to re-open, the continuation of the COVID-19 pandemic means a wide range of companies will continue to face financial challenges for several more months to come, if not longer. Yet if your company is struggling to pull in revenue compared to previous years, then finance and procurement teams can offset some of those losses by cutting expenses through the following methods:
- Adjust Subscriptions/Service PlansFrom corporate cell phone plans that no longer need international roaming to cable subscriptions that go unwatched in empty offices, there’s a good chance you can adjust or cut subscriptions and service plans to match new usage patterns. Even if your savings might be relatively small, these changes can at least offset new costs related to remote work, such as procuring home office equipment.
- Reduce TravelA decline in corporate travel might have already saved your company significant amounts of money, and you may want to continue these cuts, even when your employees can safely resume traveling. Use this time to experiment with everything from video calls to virtual conferences to see how you can still get value out of online interactions, without the associated travel budget. You might even be able to adjust travel-related subscriptions or service plans, like airport lounge access or expense allotments for ride-sharing.
- Re-Examine Office Space CostsWhile you might not be able to cut your office space right away, you can at least plan ahead for your next lease. If remote work has been successful for your company, you could save money by eventually moving into a smaller space or by pausing planned expansions. Meanwhile, you can cut costs by re-examining your utility bills. If only a limited number of employees are in your office, or if everyone’s working from home, make sure you’re not running electricity, air conditioning or heating unnecessarily.
- Reduce Office Supply PurchasesWith fewer people in your office, you can likely cut back on office supplies. From printer ink to coffee to pens, so many items that you might not have given thought to in the past, and perhaps auto-ordered, can now be adjusted to reflect your current usage. At the very least, you can shift office supply budgets from your main office to remote work expenses.
- Eliminate Duplicate PurchasesDuplicate purchases can occur within any organization, but finance and procurement teams likely want to pay even closer attention to this area due to COVID-19. With a distributed workforce, it’s possible for communication lines to break down, and employees end up making the same purchases without consulting one another. That’s why it’s important to use tools like e-procurement software, where purchases can be tracked and approved before being finalized, and finance and procurement teams can maintain visibility across all purchasing. You can also invest in remote work communication tools to help avoid these types of issues before they even get to the purchasing stage.
- Purchase in BulkIf you have the capital, you could help other businesses looking to unload inventory or streamline their operations by purchasing in bulk. By doing so, you can often get a discount on your purchases. So if you know you need certain office supplies or if you can lock into a service contract for a longer period than usual, you may be able to save money in the long run.
- Pay in AdvanceSimilar to purchasing in bulk, paying in advance for products and services, rather than operating on, say, a net 30 basis, you can help vendors facing cash flow issues. As such, they may be willing to give you a slight discount. Plus, paying in advance can help you build great relationships with vendors, who then might be more willing to go the extra mile for you. In contrast, paying late or with long terms can frustrate vendors, causing them to eventually drop you as a customer once their finances improve.
- Use Freelancers/ContractorsIf you need staffing resources but aren’t at the point where you can hire full-time employees, consider using freelancers or contract employees as a way to save money in the short term. For example, you could hire a social media freelancer to help with your social media marketing strategy for, say, $1,000 per month, which at $12,000 per year would be several times less than most full-time employees, even if the freelancer’s hourly rate is more expensive. If you need more comprehensive support, you might eventually be better off hiring a full-time employee, but at least until the economy improves, you could leverage the flexibility and relatively low costs of freelance or contract staff.
- Outsource TasksSimilar to using freelancers or contract staff, you could outsource certain functions to other companies. Doing so can not only free up resources internally but also can often come at a lower cost than hiring more staff. For example, GoProcure’s Buyer’s Desk takes on the heavy lifting for tasks like sourcing vendors and on-boarding suppliers. Plus, the expertise of outsourcing partners can help you identify more cost-saving opportunities.
- Implement Purchasing ControlsSometimes you simply need to cut off spending to cut costs. If budgets are too flexible, it’s too easy to blow past them. Instead, if you implement purchasing controls, such as where all purchases above a certain amount need to be reviewed by a senior finance leader, then you can hold off on large purchases that would bust your budget. By gaining visibility into these purchase requests before they go through, you can then plan accordingly. You can analyze spend patterns and decide how to make that purchase work next quarter or find other areas to cut before you can approve the purchase for the current quarter.
Although the current economic climate remains difficult, using technology like e-procurement or spend management platforms, along with these other cost-cutting strategies, can help your company weather the storm. By getting more control and visibility into your spending now, you can better position your company for long-term success.
Want to learn more about how e-procurement/spend management technology can help your company reduce costs? Request a free consultation with our product experts today.