Below you will find 9 cost cutting tips:
1. Pay no bills until they’re due.
2. Exercise dormant lines of credit. Business owners set up lines of credit they don’t use them; remember the principal of “other people’s money”. Lines of credit and credit cards have a 30 day grace period; pay off the balance before the next billing cycle and you pay no interest. The bank will drop your line of credit if it is not used for a certain period of time because they are not making any money on it; so be sure to check their use requirements. Many business owners consider cancel lines of credit because there is an annual fee attached, but remember the rule of banking: it is easier to qualify for credit when you do not need it.
3. Monitor your personal and business credit and set up new lines of credit now before you need them. every business hits a crisis where they need lines of credit to survive.
4. Closely monitor your three sources of cash:
- Projects in process, not yet completed
- Projects billed out, but not yet collected
- Paid billings: cash on hand
5. Complete and bill clients as fast as possible. The sooner they’re billed, the sooner they will pay.
6. Offer your contractors a higher fee if they wait to be paid until you’re paid. Also, get terms from your vendors and suppliers so you have a chance to make money on the product before you have to pay for it.
7. Past-due accounts will kill a business and use the principle that “the squeaky wheel gets the grease”. Some will say that if you bug them to much they may not buy from you again but ask yourself if you want to keep clients that eat up your time and resources by not paying their bills on time!
8. Get interest on your money by setting up a “sweeps” account or interest bearing checking account; while the amounts may not seem like a lot, your money is 100% protected from loss, it takes no effort on your part and it does not tie up your funds.
9. Use pre-payment or COD’s when possible. Offer a discount, if necessary. Require pre-payment from private clients, or business clients that may cause payment problems. If they won’t pre-pay or COD, turn down the work. Don’t work for free.