Cost Control Made Simple: Eleven Ways to Save Money like a CFO

Accounting is no easy task, and every company shares a common goal: cost savings. How can you eliminate costs as much as possible to optimize cash flow and increase your profit? There are a few things you can do on your own to help cut down the expenses by implementing strategies used by professionals like chief financial officers (CFOs). Just because you don’t have the expertise of a professional CFO doesn’t mean that there aren’t ways for you to learn from them and use their strategies. Let's take a closer look at some techniques you can implement to help save your money in the long run. 

1: Regularly conduct a deep analysis of your finances

It’s easy to keep putting money into areas that are underperforming, throwing away valuable profits. Suppose you analyze profit and loss statements, balance sheets, and cash flow reports regularly. In that case, it’s easier to catch these areas before they cause significant harm. Analyze your finances and find wasteful spending to eliminate it.

2: Yearly Zero-Based Budgeting 

Every year, you should start a budget from scratch, rather than simply adjusting the previous year’s. This forces a thorough analysis of your costs and income, allowing you to ensure every cost is justified before continuing it into the new year. During this process, you can also eliminate overlooked but profit-consuming areas like legacy spending. 

3: Leverage technology

New advancements in technology can help you get rid of manual processes that might be costing you labor hours. These programs not only eliminate the need to hire new employees to take care of these processes but also prevent human errors that you'll have to fix later. It might be worth investing in automation technology as you scale your company. 

4: Outsource non-core functions (including a CFO) 

Every company needs services like HR, finance, and IT, but hiring an in-house team for each of these can add up quickly. Consider outsourcing these tasks to access the expertise without the cost of a full-time team.

5: Monitor KPI’s and cost per output

By tracking cost-related KPIs, you can fine-tune spending relative to the return or value generated. These KPIs can include CAC (customer acquisition cost), inventory turnover, and labor efficiency.

6: Invest in Employee Productivity and Retention

Spending a little extra money on your employees can save you money in the long run. Improve your training and tools, enabling them to work more efficiently and tailor their services better to your company. This reduces high turnover and inefficiency, both of which are hidden costs. Don’t forget to put effort into the workplace culture. A productive team does more work with less time.

7: Optimize pricing and profit margins

Routinely review your pricing models and the product/service margins. You can make small changes in pricing or cut offerings with low margins. These changes can significantly impact profitability, so make sure to review your supply and demand on a regular basis.

8: Perform a Subscription and SaaS Audit

It’s dangerously easy to get sucked into paying for subscription services. Conduct an in-depth audit of your recurring subscriptions and SaaS (Software as a Service). Eliminate not only the unused ones, but also look at subscriptions that might have overlapping services.

9: Benchmark against industry standards

Other companies in your industry have the same profit spending goals as you. Take a look at different areas and compare them to the industry standards. You might find that you are underspending or overperforming in places where you don’t have to.

10: Encourage a Cost-conscious culture

Your employees are closest to the work; they often are the first to see savings opportunities. Train your team to look out for these opportunities and to be budget-aware. Reward cost-saving ideas to encourage them further.

11: Delay or phase large expenditures

Large purchases can easily set you behind, especially if they are made without financial preparation. Don’t make any larger purchases until they are necessary for the company. This should give you some time to budget them into your finances. Take your time to validate the ROI and ensure that the purchase will be cost-efficient in the long run.

Now that we have dug a little deeper into things that you can do on your own, why would hiring a Fractional CFO still be beneficial to your cost savings and increase your profit margins? 

How can I take my cost-saving to the next level with a fractional CFO? 

While it is possible to implement cost-saving strategies on your own, growth in your company might eventually necessitate a professional CFO. A CFO can analyze your finances and come up with strategies to cut down on costs based on their professional experience and education. They can help you create a professional-level budget to cut costs wherever possible and provide substitutions for large expenditures.

On top of that, they can manage your cash flow and financial reporting. They will implement strategies for risk mitigation and can even support Mergers & Acquisitions. A CFO will protect your finances and refine your expenses as much as possible, ultimately saving you money.

Why would hiring a CFO be a good choice?

First and foremost, they can save you time. Managing your finances can be a full-time job that not every company owner has the time to address. A CFO can provide services at a senior level and identify even more cost-cutting opportunities with their expertise. If you are looking to optimize your financial operations, then hiring a Fractional CFO is the way to go; their services provide overall improved decision making on behalf of your costs and profits.

While it’s possible to do your own budgeting and cut down expenses by yourself, a CFO can not only take that responsibility off your hands but also bring their expertise to the table and help you become as efficient as possible. A CFO knows the ins and outs of accounting; they can advise you on the smartest choices to make for your company's cost optimization.

Contact West to East Business Solutions today to set up a free consultation and see how our professionals can help you save money in the future.