Call 01383 324 098

Specialist accounting and business services for Consultants, Trades Professionals & Creative Companies

Regain control of business costs

By 1st August 2016

Here is an excellent article from the team at Sage about controlling business costs

Regaining control of your business costs

Regaining control of your business costs can be quick and easy and soon your business could be in a far better position.

Shrewd owners minimise their spending when starting their business. It makes it easier to turn a profit and limits losses should the business fail. In the early days, they continue to control costs in all areas.

But, gradually, things can change - even in just a few years - especially if a business grows and takes on staff.

With so many things competing for their attention, the owner can no longer keep track of all expenditure. Inefficiencies can quietly creep into systems, too. The net result is the business wastes money - often significant sums - paying too much or buying things it doesn’t need.

Inertia is another factor. When the owner started the business they probably shopped around for the best deals. Over time, many businesses come to rely on regular suppliers. Sticking with current deals and relationships might appear wise - it’s less hassle and less risky - but what if you could get better value elsewhere?

Failure to control costs can place serious strain on your cash flow, which could ultimately spell the end for your business. At very least, your business won’t be as profitable as it could be. You could also be throwing away money you could instead use to develop your business. Fortunately, regaining control of your business costs can be quick and easy and soon your business could be in a far better position. Our guide shows how it’s done.


How to get your costs under control

Assess your current costs

Take a close look at all your outgoings - don’t leave anything out. Major costs could include wages, premises, utilities, materials/stock, travel, transport, equipment, IT, marketing, telecommunications, maybe R&D and finance. Break down each of these so you can better understand them. For example, utilities will include water, electricity and possibly gas. Look for less obvious costs. Find out exactly how much you spend, when you spend it, what you spend it on and whom you buy from. Detail your outgoings in a spreadsheet or accounts software - it will make analysis easier.

Understand your spending habits and trends

Compare current spending over 12 months to the same period in the previous year and the year before that. How much have your costs increased? Why? If necessary, seek answers from other team members. Have any of your costs gone down? Why? Be clear in your mind why changes have occurred, either in prices or consumption habits

Remind yourself of your objectives

This will help you to judge whether spending is justified, as well as expose areas where spending isn’t in line with your goals. Are you being overly ambitious perhaps? If you’re not a premier supplier, should you be paying less for materials? Are you spending too much bringing non-core products to market? The 80/20 rule:

Typically 80% of costs come from 20% of your supply items or services.

 Involve your staff

 You won’t be able to come up with all of the solutions - successful cost control is a team game. If you employ people, ask them how your business could reduce its costs. Find out what problems they encounter that waste time or resources. Reward those who come up with the best cost-saving ideas. You must get full buy-in from your team. If you’re likely to need to make redundancies, make sure your communication with employees is good and that they understand why your actions are vital to the business’s wellbeing.

Speak to your customers

Could you be providing your customers with things they don’t really want? The best way to find out is to ask them. Present it as something you’re doing to ensure they’re happy with what they get from your business. Why pay for excess packaging the customer doesn’t want or need, for example? Why serve a side salad or fries when some won’t eat it? Why send your customers expensive leaflets through the post when they don’t read them?

Go for the ‘quick and easy wins’ first

Rule nothing out when making your initial assessment, because businesses can waste money in all areas - some more obvious than others. And savings can be made quickly and easily without affecting quality and performance. If your spending far outweighs your budget, look for savings in these areas first. Sometimes just using less can provide significant savings. Energy is a good example of this: making sure that premises aren’t being lit or heated unnecessarily can provide big savings. Unnecessary journeys (e.g. deliveries or client meetings) could be adding significantly to your travel costs.

Look for savings in less obvious places

There might be areas where you simply cannot reduce costs, but don’t consider anything to be a ‘fixed cost’. Also try to find ways to make your processes more efficient and consider whether better use of technology could help. Ask your bank how you can reduce any charges you might be paying them. Check your supplier invoices to make sure you’re not being overcharged or double-billed. Investing in software to take care of tasks for which you currently use manual systems could also save you time and money. Bulk purchases could save time and money


Saving money

Rule nothing out when making your initial assessment, because businesses can waste money in all areas.

Focus on human resources

The first major consideration is whether any job cuts are necessary, which is never an easy thing to do. Remember, you make roles redundant, not people, and only if you have no other choice (i.e. the role is no longer viable). A cheaper solution could be to outsource certain functions of your business (e.g. accounts, recruitment, payroll). Alternatively, using freelances might provide the perfect cost-effective solution. Enabling your staff to work from home when possible could also slim your costs, providing output doesn’t suffer as a result.

Don’t shy away from making difficult or unpopular decisions

Cutting costs often involves tough decisions, while reaction might not be universally favourable, especially if it means redundancies or cutting back on overtime, etc. That doesn’t mean you can afford to shy away from your responsibilities to your business. Introducing new ways of doing things can be difficult and it can take time. You might even experience resistance to change, which you’ll need to manage.

Speak to your suppliers

Tell your suppliers you need to make savings and ask whether they can improve their prices or provide better value for money. If not, however much you value your relationships with them, explore your options. Caution is advised, of course. You might get cheaper prices but inferior quality and service. Don’t focus just on price - focus on value for money. Negotiating too strongly with existing suppliers can backfire. You might get a better deal, but simply leave your supplier eager to recoup lost revenue on other orders. When negotiating with suppliers both sides must feel reasonably satisfied if the relationship is to continue. Building strong personal relationships can enable you to get good deals over a long period. Another cost-saving option might be to consolidate your purchasing by buying from a limited number of suppliers.

Less than half of small businesses are aware of other tariffs offered by their energy supplier


Think about the future

The dangers of ill-considered cuts

Cutting costs too severely or in the wrong places can leave your business in a weaker position. The quality of your products or services could suffer, which could hurt sales. Morale among the ‘troops’ could also dip, especially if you’ve made redundancies and cut back on overtime or bonuses. Knowing that you’re making tough decisions for very good business reasons certainly helps and your communication with employees must be good at all times. If not, you risk losing good people. Some business owners immediately slash marketing budgets when seeking to make savings, but if done recklessly this can severely damage sales and threaten the business’s longer-term health. Before making cuts, carefully think through the implications.

Draw up new budgets

Look at your business’s forecasted revenue for the next 12 months and decide how much you need to use to operate your business. Your operating costs should be divided into separate budgets. You might be able to revisit previous budgets. If not, think carefully about how much money you need to commit so your business functions as it needs to. When setting budgets, there’s no point in being stingy or overly generous. Once realistic budgets have been set, you must stick to them if you are to control your costs.


Create a cost-cutting plan

Now you know exactly where you will cut costs and by how much if your business is to operate on a better footing. Stay focused on your objectives and set targets; then you’ll be able to judge the success of your cost cutting. To prevent inefficiencies creeping back, carry out regular cost reviews (at least every quarter). To help stay on top of your business’s finances, work more closely with your accounting software - it can really help you to minimise costs and run your business much more efficiently


If you thought the age of apprenticeships was over, think again

Modern Apprenticeships are in the news quite a bit at the moment with the Scottish Government looking to fill the skills gap.  Here's some information in case your business might think about an apprentice

The battle between cyber criminals and companies is constant and on-going

Business is now done mostly on personal computers, smartphones and tablets so we often take the advantages of this flexibility somewhat for granted.  It is too easy to forget that each of these devices may represent a risk to the company and to its data.

Business mileage payments for electric and hybrid vehicles.

With the number of electric cars in the UK now exceeding 155K and interestingly over 5K vans, business use and how to work out mileage reimbursements now can present a considerable problem.   

Employing Children, Save Tax and keep them busy this summer

I’m bored - the eternal summer cry from the kids

Here’s the answer - employ them and save on tax at the same time

Paying salaries to your children is a good way to reduce your taxable profits but how should you do it legally?

Company Vehicles - choose wisely

Choosing the right vehicle(s) and the right finance options for your business is an important decision and a costly one if got wrong.

What can you and should you be claiming for business expenses

Just what can you and should you be claiming for business expenses.  This is one of the most frequent questions that an accountant is asked.  

How to access £9 billion public sector spending with SDP

The Supplier Development Programme supports businesses competing for the £9 billion annual spend of the Scottish public sector. 

A new business can struggle to get the pricing right - we offer some simple tips

This is something, as Accountants, we come across time and time again.  It’s often the reason for early business failure and it’s completely avoidable.  Here are some simple tips.  

Find out if your suppliers are still performing as well as you want them to

We found this good article courtesy of bluqube who offer accountancy software and thought you might find it interesting.

5 ways businesses will benefit from a Brexit VAT health check

When the UK leaves the EU, the cross-border VAT environment for businesses will change.

Performing a VAT health check now will highlight practical measures that businesses can take to ease the transition and minimise risk

Business Loans Scotland provides gap funding to businesses that are looking to grow but need external finance to make it happen.

Does your business need funding to grow? Are you struggling to secure finance from the traditional lenders? Business Loans Scotland may be able to help.

Facebook makes it easy to compete in the marketing stakes

We came across this article on The Drum and thought it really insightful as to how small business can easily compete with large corporates on Social Media.  There is a raft of tools available now to help small business create compelling ads for little or no cost and reach ‘000’s for much less than the tiniest ad in the local press.  Read on…

When Referrals go wrong

When a client refers you on for business, that’s great isn’t it?   Well maybe, but read on for some potential pitfalls and how to solve them

7 ideas on how to cover self employed illness and inability to work

With all the recent furore over the “White Van Man” NI contributions rising then scrapped in the Spring Budget, we thought we’d have a look at what happens when a self employed business owner falls ill and can’t work. 

Auto enrolment does not cover the self employed or sole trader.

It's a risky strategy NOT to plan ahead for retirement when self employed.   But many self employed are already struggling to keep heads above water without finding extra funds for pensions

Information from HMRC on Making Tax Digital for business

Businesses should not have to wait until the end of the tax year or even longer before knowing how much tax they should pay. 

From April 2018, businesses, including everyone who is self-employed and those letting out property, will update HMRC at least quarterly

VAT Explained Part 3 - International VAT

Did you know that VAT is recoverable in more than 40 countries around the world?

For companies who have employees that travel to any of those countries, there is a percentage of tax in many expense types that can be reclaimed when business travellers return to their home country.

VAT Explained Part 2 - Fuel and Mileage

There are four ways to reclaim VAT paid on fuel for business trips: 

VAT Explained Part 1 - Taxes made clear

VAT was introduced to the UK over 40 years ago on the 1st of April 1973. It was supposed to be straightforward and simple. Yet many years later, some of the rules can still leave you scratching your head – and they’re changing all the time

Business Rates - do not be caught out and check it now

The 2017 Business Rates revaluation is under way.  This happens about every 5 years normally and should have been in 2015 but was postponed till 2017.

When HMRC audit a business they look at the entire travel and expenses process

Most people assume HMRC inspectors are only interested in completed expense claims and associated receipts – but they’re not. When the time comes to audit your business, HMRC will be looking at your entire travel and expense

Intellectual Property - protect your ideas and innovations before someone else steals it.

When a business starts up often the last thing on the entrepreneurs mind is Intellectual Property.  

Keeping your finger on the Digital Pulse might save your business '000's

With Cyber Crime costing SME's over £18 billion, it pays to keep up to date 

4 Ways Cyber Crime Can Hurt Your Small Business.

We found this excellent article on Business Know How.  It is something that many small businesses still overlook until it is too late – here are 4 consequences.  And here is a link to the National Cyber Crime Unit for excellent advice

Business Awards bring success so just do it

Business Awards are without a doubt a great way to increase your business profile.  Read on for 5 Top Tips on how to make your entry a winner

Working from home. How do you calculate a tax claim for heating and lighting?

Do you work from home and use the same rooms for personal use as well?   Here’s how to work out a tax claim for heating and lighting.  

Persons with Significant Control changes - does this affect you and if so, what you should be doing

From April 2016, UK companies and Limited Liability Partnerships are required to keep a register of Persons with significant control (PSC). 

10 Practical Tips for small business to reduce the tax bill

It’s never a wrong time to review your company set up and ongoing strategy.  Here are 10 Top Tips to help you possibly reduce your tax and accountants bill.

When is a hobby actually a business? What you think and what the taxman thinks might be quite different. Read on...

You might think that selling second-hand items and crafts online is a hobby, but the taxman will class you as a business if it can prove you are doing “anything in the nature of trade”.


Keeping an eye on employee expenses can vastly improve the company bottom line

Business owners know they need to maintain a mobile workforce. But at the same time, “out of sight” needn’t mean “out of mind” as a new generation of payments services are using data to enable employers to keep tabs on those on the road. 

RTI and Micro Businesses. You can now be fined for late submissions

HMRC has updated its guidance on what happens when employers fail to report their business’s payroll information on time. Here’s what you need to know:

Seven ways the cloud can help you manage your business

If you’re a start-up, making use of the cloud can be a no brainer, but for more established businesses, the advantages of heading off-site may be harder to quantify.

Owing Property personally or through a limited company: what is best?

The majority of investors have tended to own their property portfolio in personal names because it’s beneficial for them to do so when it comes to selling the property.

What to do if your biggest customer goes bust

What to do if your biggest customer goes bust - For a small company, landing a big-name customer is cause for celebration – but no firm is too big to fail. Here are ten essential steps to help you survive if your main client shuts down.

CIS returns must be submitted online from April 2016, sub- contractor verifications to be done online from April 2017 and there are also changes to those who can be paid gross 

2016 Employment Law Updates

A useful snapshot of the latest employment updates.  The changes to National Living Wage are undoubtedly having an impact on many small businesses.  

No Dodges for Contractors

There aren’t any ‘dodges’ for Contractors with the new Finance Bill legislation.

Setting up your contractor company - Limited, Umbrella or PAYE?

This is the first in our series of articles to help Contractors get started and run an efficient company. 

Setting up your contractor company - Limited, Umbrella or PAYE?

Setting up your Company

Travel and Subsistence Legislation Update

The long awaited travel and subsistence legislation has finally been published in full in the Finance Bill 2016. 

Bereavement Pay and Leave

It’s always a difficult time when someone passes away and as a good employer, you want to do the ‘right thing’.  But there is still the smooth running of your business to consider, especially for smaller companies.

Illegal Workers could cost you £20K each

With the summer months just around the corner, many small businesses may well be looking to augment staff with temporary employees and there is a good chance they may come from overseas.  But how robust are your pre-employment checks to ensure you don’t employ and illegal immigrant?  And how can you avoid being accused of racism at the same time.

Trading Losses not always a disaster

If you are coming to the end of your business financial year and it looks like you have made a loss, there are options that you and your accountant should look at to minimise the impact

Pensions and Tax Year End

If you are thinking about making a pension contribution before the end of the tax year read on to find out about current limits

Zero Hour Contracts avoid getting caught out

The hospitality industry is one of the most prolific users of Zero Hour Contracts. But not all employers are using them correctly. 

Minimum Wage - the clock is ticking

The Living Wage along with Auto Enrolment, are the legislation changes that are really making a financial impact on employers this year. Yet amazingly there are still business owners that are not preparing for the changes or don’t know anything about them.

Mandatory online filing of CIS returns and verifications

Over 85% of contractors and their authorised agents are already sending their CIS returns online, but from April 2016 everyone will have to use the online service.  HMRC will no longer be accepting any paper forms from that date.

10 Worst Tax Deadline Excuses

The ten worst excuses for missing the 31 January Self Assessment deadline for 2013 to 14 according to HMRC.

(We loved these - especially going to Italy for 5 years!)

Apprentices young 'uns for hire

You be giving thought to taking on an apprentice.  Government continue to push apprenticeships and there are a myriad of support mechanisms in your local area to help you.  But here is an overview to help you get started.

Annual Investment Allowance - plan ahead

Annual investment allowance (AIA) is a relief that can be claimed on the cost of plant and machinery. Up to 100% of the costs can be claimed to help reduce the potential tax liability for that business

R&D Tax Credits still alive and paying out

The Chancellor’s Autumn Statement made no changes at all with regard to R&D Tax Credits. Some had speculated that the relief might be reduced significantly 

Tips, Gratuities and Tax

Here’s a very interesting point about tips and how to handle them. The way the tips are treated will depend on who receives them and who distributes them.

Christmas Gifts and Staff

If you decide to give your employees a cash bonus, this will be treated as taxable income and subject to tax and national insurance the same as other earnings.

Tax: a Sign of Success?

Remember you can only build wealth from ‘after tax’ income.  A big payment to HMRC is not failure to hide the money; it’s a clear indicator of success....

The Scottish rate of Income Tax will come into effect from 6 April 2016.

On 2 December 2015, HMRC will start to contact customers living in Scotland where records show that this is their main address, to inform them they have been identified as being a Scottish taxpayer. 

What you need to know.........

A Guide to Cloud Accounting

Cloud Accounting is clearly the way to go now for small businesses with the growth of good connectivity.  Indeed, we would recommend new start businesses look at Cloud Accounting right from the start.  

Book-keeping basics..... NOT top secret

Few people start a business so they can do paperwork. Spending time adding up receipts or pushing invoices around a desk is nobody’s idea of fun – unless you’re a book-keeper or accountant.   

Auto Enrolment at a glance

If you simply need to familiarise yourself with automatic enrolment here is a brief outline

What is automatic enrolment?

In an effort to encourage more people to save for their retirement, the Government has introduced new rules which require employers, and most employees, to save into a pension scheme.

How to improve your company credit rating

If you are applying for funding from any sources – see our article on Funding Sources – it's vitally important that your credit rating is as good as possible and here are our tips to help.

Sources of Funding

In a recent article we talked about improving cashflow and feedback has been positive.  But what if you need a cash injection into your business – for a variety of reasons?  Gone are the days when it was a straightforward trip to the Bank Manager.  Indeed SMEs are still finding it difficult to get the necessary finance to grow or support their businesses.

13 sure fire tips to improve your cashflow

It's a much overused cliché but cash really is king when you are running a small business. It does not matter how much money is coming into the business in the future if you don't have enough to keep you going. You have your own suppliers to pay, staff who expect wages every month, rent to pay and so on.  Here are 13 sure fire ways to improve your cashflow:

What do you think is the important component of a client relationship? Is it:

  • Regular communication?
  • Sharing the same values?
  • Having a strong personal connection?

We think these are all very important but we believe that the top component is TRUST.....

Choosing the right accountant - 7 Top Tips

Choosing the right accountant when starting in business, or indeed, when you realise it’s time to move on can be a daunting task....

7 Top Tax Breaks for Small Business

Many small businesses are failing to take advantage of the tax breaks that could provide enormous financial benefit to their business.  In fact, a recent report suggests that a third are still unaware of the breaks available to apply for...

All Priory Clients are entered into our brand new annual Prize Draw.  A welcome gift for you just at the time of year when you might need it most. 

Buy to Let - Profit or Loss?

George Osborne wiped nearly 11pc off the gross returns from buy-to-let properties, leaving many landlords facing the prospect of an annual loss, when he slashed higher-rate relief on mortgages in the Budget.

Crackdown on Contract Workers

Contract workers and freelancers who set up companies to cut tax bills could be forced to justify their tax arrangements to their employers, thanks to a proposed new crackdown.

5 Top Tips when growing your business

Summer for many means holidays and time off to relax with family and friends.  It’s also a time to ‘clear the head’ and start thinking about the business for the coming months.  

Increase prices, increase profits - understand the effect of raising and lowering prices on profitability

How did you decide on your current pricing? Did you conduct market research to understand what prospects would pay? Or did you compare yourself to your competitors and base your price on that? Or was it a random shot in the dark?  These are the ways most people do it, and they are all wrong. Because the price you set for your products and services is more important than you think.

Top Tips for Business Owners on holiday

If you plan to switch off completely – that means not even thinking about your business, then read no further and have a fabulous holiday.  But did you know that 75% of business owners still beaver away during vacation time.

Top 20 New Start Tips

Click here to get our Top Twenty Tips for New Start Businesses today

Home workers and getting the tax returns right

If you work from home you are entitled to include part of the running costs of your home in your accounts, which will save you some tax.  This is of course, good but how do you calculate the right amounts.  There are two potential methods for calculating this.

7 Top Questions to ask BEFORE you recruit a consultant

Top Questions to ask Consultancy or Coaching business before starting work with them

10 Top Reasons to Work from Home

Working from home is incredibly convenient.   If you’re starting your business, it’s also the place you have already.   It’s easy to start your business at home.   Of course you need some space and there may be distractions, but there are lots of good reasons for working from home. 

Are you a Landlord?

HMRC have now clarified that the Let Property Campaign is not coming to an end and will remain in place until further notice.   The campaign allows landlords with undeclared rental income an opportunity to come forward with minimal penalties and set their record right. 

Digital Services and the New VAT Rules

A good rule intended to clamp down on the internet giants such as Amazon has consequences for SMEs that were possibly not anticipated.

HMRC taking it anyway

Accelerated payments were introduced by the Government in the Finance Act 2014.

Top Tips for Business Travellers

At Priory Accounting, we look after the accounting needs for many Consultants – indeed it is one of our areas of specialist expertise.  

Priory Accounting is growing

We're now in Fife and Edinburgh and welcome our newest associate, George Lewis.

George is based at our new branch office in West Granton, Edinburgh and brings over 26 years of experience as an Accountant.   2015 certainly looks to be an exciting year for Priory Accounting but you can be sure that the one thing we won’t be losing sight of is the fact that almost 100% of our clients are still delighted with our services.

Renovating for Profit

Relief from capital gains tax on selling of the main residence has attracted a lot of HMRC attention in recent years

Late Payment Penalties

As the Self Assessment deadline has now passed; HMRC will begin to start issuing penalty notices to those clients who did not meet the legal requirement to file their returns on time

Creative Industries

“I don’t want distracted from my work and knowing Roddy and team are there covering my back allows me to get on with the work”

Some of our favourite clients work in the Creative Industries sector. Their feedback shows that what they value most is reliability when it comes to professional services.

Keep the Receipts

Our simple top tips to help you manage all those very important scraps of paper - especially when you're busy.

Don't be Last Minute.Com

Don’t leave it till the last minute to get your tax returns done.

If you are going to be due a payment to HMRC it makes sense to prepare your returns in good time so you can budget and manage your cash flow.

Top Tips when claiming VAT back

If you find all the different VAT rates to consider a maze Roddy is here to guide you through.

IR 35

Much has already been done to improve the administration of IR35 and there is more to do on many of the areas identified for improvement.

Minimum Wage Shame

HM Revenue & Customs (HMRC) has recently named 70 offenders who have failed to pay the National Minimum Wage (NMW).

Company Car changes

It has recently been announced that HMRC has started an online trial that will allow company car drivers to alter their company car details online.   This is a very good idea in principle but without the correct framework it could be fraught with trouble

Get in Touch Today for a FREE consultation