Last updated on July 18th, 2022
Cost Cutting in Startups and SMBs: How Accounting Optimization can Save Money
The limitation on expenses is one of the most common challenges that startups and SMBs have to face. Since the quality of your primary product or service cannot be compromised upon, you have to control the expenses of other processes. Accounting, being a natural cost-reducing service, often tops the list of cost-cutting areas. Accounting is an integral part of any business, operating without which is almost unsustainable.
So, you cannot simply kill the department to save money. However, there are a number of small changes that can be implemented to save money without any decline in the quality of service.
For cost-cutting, it is important to understand the major source of money drainage in the accounting.
1. Manpower Cost
Hiring an expert in the accounting field can help you manage the business finances & revenue model, save taxes, control unnecessary expenditures, etc. But that comes at a cost, which may not always an affordable one. CPAs and accountant have always featured in the top-earning professions.
As tax filing is mandatory for smaller businesses in most regions even while they struggling with the budget, the hiring an accountant usually seems to be an inescapable spend.
2. Office Space
For its privacy needs, accounting department will require a dedicated office space isolated from other departments. Real estate must be among the heavier expenses on your business and providing a part of it to accounting is not something worth enjoying.
Apart from the team members that will work in this department, additional infrastructure needs, like – furniture, printers, etc. will eat up the space that could have been used for other business purposes.
3. Local Machines & Hardware
From writing checks to printing receipts, almost all of the modern accounting is taking place over the computer. To deliver the fine accounting performance, your business will require a package of hardware. This may include bar code scanner, MICR reader, server, etc. along with the mandatory computers for each accountant and at least one printer.
The financial cost of the hardware set does not limit to the expensive purchase as the maintenance expenditure will arrive time to time. And did we mention about IT team in the manpower cost above?
4. Software Licenses
After spending on hardware, it the time to pay for software to get that set of hardware working. Accounting department hosts a significant demand for software. Basic spreadsheet software and reliable accounting software are almost necessary. Then depending on your business specifications, you might need more add-on software. You can choose from monthly, quarterly, annual, or other timeframe-based plans for the business, but none will go without biting on your pocket.
First and foremost challenge with cost-cutting is that it must not cut down the overall performance; neither in quantity nor in quality. As accounting is closely concerned with almost all departments and employees of your business, no fall in performance can be expected. However, even with so many restrictions, you can adopt some solutions that keep the performance same (if not better) and still save your some significant budget:
1. Offshore Accounting
Adopting the offshore accounting solutions eases almost all the pain points that have been mentioned above. As the accounting services are delivered from an entirely different location, it does not require any office space or dedicated set of hardware. Outsourcing of the services to an expert will assure the fine quality while paying much lesser than the amount you would have spent with a locally setup accounting department.
2. Shared or Enterprise Software Licenses
By implementing software, you can streamline the accounting operations in a big way and therefore, working without them cannot be recommended. To keep up with the price challenges, you can choose a smarter plan. Buying an individual license of required software for all the users is a costly affair.
You can instead opt for a shared license or enterprise license for multiple users. Not only it will bring down the average expense per user, but it also allows you the chance to bargain with the software provider.
3. Encourage ‘Work from Home’ and BYOD Culture
In the recent decade, businesses have witnessed several benefits in allowing the employees to work from home. It saves the employees from traveling hassles and they can work with peace of mind. For businesses, it creates the chances of gaining better productivity from them without offering the local resources.
Bring your own Device (BYOD) is simply what it suggests and a growing practice among the startups and SMBs. You can ask your accountant to bring their own devices to the workplace and hence you can save a plenty by not having to purchase dedicated workstations for them.
4. Cloud-Hosting Solutions
For the tech-savvy business, the cloud must be a friendly service and even the non-tech related businesses must be somehow relying on the cloud. Email service, social media, etc. are prime examples of cloud services used by businesses. For accounting operations, the cloud has multilateral ways of saving the prices. It eradicated the requirement of purchasing the local machine and server. It also supports other cost-cutting processes in accounting. With the accounting data and software hosted on the cloud, the accountant can work from home and even use their devices at the workplace. In the case of offshore accounting, cloud gives a perfect platform for monitoring and collaborating with the accountant.
Summarizing the cost-cutting methods will indicate that the solutions are usually interdependent. An emphasis is given to reducing the local hardware, which eventually saves the office space as well as the software cost. It would not be an exaggeration to say that cloud computing can be the core of your saving money tactics as it maintains the achievability of other methods.
It syncs the different processes by keeping a common platform for associated parties, which can be accessed from anywhere, anytime. In case you are not looking to adopt the technical path, offshore is the best way to begin with. Let the experts handle the record of your finance, while you concentrate on your primary business aspects.
Coming up Next
So there you have it! In next post of the series, we’ll discuss “4 Time-Saving Tips for Startups and SMBs“. You can even register your email to receive the blog updates. Until then, share your comments how you are cutting cost in your startup.