5 Important Ways Accounting Firms Can Bring Down Overhead Costs
Generating high returns with controlled expenses is one of the most important rules of doing business and accounting firms are no exception to this. However, as a firm grows and its revenues increase, so do the overhead expenses faced by it. With a larger workforce, upgraded technologies and larger inventories, cutting down on overhead costs can be difficult, but it is not impossible. These effective techniques accounting firms can leverage will go a long way in bringing down overall overhead costs and take their business to new heights.
Explore New Ways to Reduce Rent
Rent is almost always the biggest component of the overheads paid by a firm. This is particularly true for leading cities like London, which are dotted with prime commercial localities that offer great exposure and amenities, but also come with a steep rent attached. For example, the rentals in a Grade A neighbourhood like Chelsea range anywhere between £57 and £67 per square feet. Furthermore, a new or refitted space in the prime locations of the City of London can cost between £57 to a whopping £72 per square feet. These statistics only prove that the larger your office space and better the locality, the higher the rental overheads to be borne by the firm. Such high rental costs can hamper a firm’s ability to expand their business, take on new employees and add more clients. In the struggle to keep overhead costs low, firms could be preventing themselves from reaching their full revenue potential.
One of the most effective methods to keep rentals under control while also expanding your business is to consider recruiting remote employees. Roles which don’t require employees to be physically present can be moved out, freeing up a considerable amount of office space.
You can also offer employees the option of working from home or choose a shared office arrangement. Since shared offices take care of maintenance, they usually work out to much cheaper than having your own office space.
Consider Offshoring Certain Functions
Offshoring certain administrative functions can be a game-changer for accounting firms. By offshoring routine tasks, firms will have more time freed up for priority work like business development and increased face time with clients. Offshoring these routine tasks also most times come at a lower cost, thereby reducing your overhead costs even further. For example, by offshoring your accounting services, smaller tasks like scanning and indexing of documents, data entry, record keeping, reconciling bank transactions with invoices and query management, you can cut down on a large chunk of overhead costs. Business process outsourcing will reduce the amount of office space you actually require and will help you focus on growing your firm’s revenues.
Choose a Cloud-Based System
Cybersecurity for accountants is crucial because of the nature of information firms typically handle. Migrating your business functions to a cloud-based system can be an effective way to support other cost-reduction measures like remote employment and also improve cybersecurity. It helps you keep a track of your business processes in real time, without the need for heavy equipment to store data and occupy space. Working from a cloud-based system also gives you the advantage of always having access to your company data even if you are not working from the office.
To add to that, switching to a cloud-based service is more efficient as it doesn’t require expensive installation, maintenance or regular IT support. Cutting down on these services will drastically reduce your overhead costs with the added benefit of security and extra room at the workplace. Shifting to the cloud will also make your firm prepared for business process outsourcing.
Reassess All Third-Party Contracts
If you are working with third-party vendors or service providers, re-evaluate contracts to check which ones are essential and which ones are costing your firm too much. Third-party vendors tend to take up a significant portion of overhead costs and aren’t always essential. Many firms choose these third-parties for the ease and convenience which they provide but ask yourself if they are actually providing value to your company. If these tasks can be undertaken by your own employees, then terminating your contracts with third parties can drastically reduce the amount you will be paying as overheads. They are mostly the middle-men who help bigger firms in ‘getting the work done’ and can be cut down with a little extra work from your end.
On the other hand, re-evaluating third-party contracts also gives you the opportunity to find new vendors and service providers that offer the same services at a lower rate. You could also explore moving new services, currently done in-house, to third parties if they are available for a lower cost. This can help reduce the workload of your employees and will help your firm focus on building your business. With the rise of the gig economy, accounting firms now have many opportunities to find a more cost-effective process.
Bring Down Telecom Costs
When it comes to cutting down overhead costs, the one method which is underrated but highly effective is to reconsider your telecom expenses. Whether you are a startup or a well-established firm, phone bills are a major expense because of the constant following up and new-client proposals. This is especially true if you have clients across the country and the globe. International calls can be very expensive, especially if you need to do them on a regular basis. Instead, you can try switching to internet-based calls like Skype or WhatsApp and cut down drastically on international phone bills. With today’s advanced media plans, internet calls offer much more clarity when compared to traditional phone calls. They also provide the benefit of video calls, which can create the experience of a real-time meeting and increased face time with your clients.
With the help of these techniques, your firm can reduce the total amount spent on overhead costs and increase its profitability. When you aren’t constricted by high overheads, you can begin to focus more on the quality of services you provide. With the additional time you will have in your hands, you can use it to spend more time with your clients face-to-face. At Sundaram Business Services, we understand how critical this is for you.
To learn more about Sundaram Business Services and how we can support your organisation, visit sundarambizserv.com