5 Ways To Reduce Business Costs Amidst Rising Interest Rates
As inflation soars to anine-year high and interest ratesclimb, businesses worldwide are feeling the heat.In Asia, some companies outside the financial sector aredefaulting at higher rates. Singaporean businesses are also grappling with a heavier financing burden, with B2B bad debt write-offs risingnearly 50% higher than last year.Some cost-cutting is in order. Layoffs are making the headlines again, and hiring freezes and restructured pay packages are increasingly commonplace in companies both big and small.Amidst the increasingly challenging environment, here are a few ways your business can adapt.
Maximise the use of your office space
Rental doesn’t come cheap in Singapore. Between January to March 2021, the median rent for conventional office space hereset business owners back roughly S$2.51 to S$7.95 per square foot per month.If rent is eating into your margins, consider optimising the use of your office space. Get rid of overflowing storage and reconfigure how office equipment and furniture are placed. Better yet, use certain spaces for more than one purpose: meeting rooms, for example, can double as a break room or storage room if they’re used infrequently.
Technology comes with many virtues for businesses. Some, like Google Drive and Evernote, help to consolidate important documents and provide a space for collaborative work. These tools are more cost and time-efficient – and environmentally-friendly – alternatives to ink and paper.Going paperless with these tools won’t turn your business a significant dime, but when printing costs betweenS$0.10 to S$0.14, doing away with printouts can give your business some breathing space.Better yet, using technology to work collaboratively also reduces time wastage by keeping everyone abreast of document updates in real-time. Employees don’t have to worry about accidentally omitting important information, and they also won’t have to hand over documents themselves physically.
Avoid accumulating debt
If you’re a small business owner, chances are that your business credit card is in your own name. Always pay off your card in full every month to avoid snowballing interest charges that could land you and your business in financial and legal trouble.As cash flow tightens, it’s best to avoid unnecessary debt by also carefully forecasting any big plans your business might have. Do a cost-benefit analysis beforehand to see if expanding the business or launching a new product is feasible rather than adapting on the fly.If some debt is unavoidable, make sure you’re aware of the opportunity costs first. Excess debt can damage your company’s credit rating and lock you out of better loan terms in future.
Manage your time better
Time truly is money, and businesses can cut costs by ensuring that time is productively used during working hours.For one, minimise meetings by setting a clear agenda beforehand. If most questions posed can be answered via email, there’s no need for a meeting to be set up in the first place.Another way to ensure that your employees stay on task is to set expectations for how long a task should take consistently. Sweeten this arrangement by offering incentives if tasks are accomplished quicker.Many apps, like Toggl and Time Doctor, can also reduce costs by tracking employee working hours and productivity so that companies can budget for more accurate payroll. While these tools are helpful, they can also damage trust between employer and employee if staff and not consulted before they are deployed.
Use an e-payment solution like EzyPayment
EzyPayment is one of Singapore’s leading B2B digital payment platforms. The platform was launched by Singapore E-Business (SGeBIZ), a Fintech company providing digital procure-to-pay solutions. Since 2021, SGeBIZ has been awarded a Major Payment Institution (MPI) license approved by the Monetary Authority of Singapore (MAS).As doing business gets more expensive, SGeBIZ’s EzyPayment can help your company reduce financing costs and provide your business with the breathing space you need. Here’s how.EzyPayment enables businesses to settle payments using a card-to-account payment platform. You can link your existing business credit cards to enjoy up to 60 days of interest-free credit when you make a purchase via the EzyPayment platform. That could be a huge game-changer if your business is dependent on bank loans, especially when interest rates are expected to rise withfurther rate hikes in the near future. You also stand a higher chance of negotiating for early-payment discounts with vendors since you are more likely to make payments on time without worrying about being cash-tight.For vendors and receivers, EzyPayment also shortens the cash conversion cycle by guaranteeing payment within just two to five days after the payment is made, a contrast to the common 30-day payment terms. That ensures suppliers get paid on time and get the cash flow they need to operate in an increasingly cash-starved environment.Fully integrated with the most widely used enterprise resourcing planning and accounting apps like Xero, MYOB, Quickbooks, Autocount, and Geo, you won’t need to fork outa sum to hire a third-party accountant with EzyPayment.EzyPayment also automatically reconciles all invoices. This feature minimises the risk of manual data entry errors and saves your business both time and cost, ensuring that your records are all in order as your business looks to secure loans quicker.
Ride the tide out with EzyPayment
Low inflation and interest rates won’t make a comeback anytime soon, and companies will have to buckle up as the economic headwinds intensify.Together with EzyPayment, your business not only gets the breathing space it needs but also added flexibility and liquidity – all on your existing credit cards. Simply plug in, and EzyPayment’s solutions will see your business through for the long haul.Ready to ride out the inflation wave to success? Get in touch with us today.