To keep your business profitable, it pays to keep your eyes open for ways to cut costs wherever you can. If you’re not focusing on back-office functions like accounts payable, however, you could be missing plenty of opportunities to save. Put these tips into practice right now to keep more profits in your pocket.
1. Unlock early payment perks
Paying your vendors early isn’t just great for building strong partnerships. Some vendors will give you discounts of up to 15 percent if you pay a few days to a week early, so set up a reminder to prioritize those payments. Or, set up automatic payments for those vendors, so you never miss out on the savings.
2. Avoid credit card surcharges
Credit card surcharges can take a big bite out of your budget. Coffee entrepreneur Steve Dean avoided a hefty credit card surcharge at his Janesville, Wisconsin, business Mocha Moment — and saved himself roughly $1,500 a year.
As a roaster, Dean was buying $7,000 to $8,000 in coffee every eight weeks from a large importer in California. When his vendor started charging him a 3 percent surcharge to pay with a credit card, Dean went looking for another, more economical way to pay.
“It’s 2018, so I didn’t want to send a paper check in the mail, and the best alternative option I found was a $20 repetitive wire transfer,” Dean said. That is until he learned about Deluxe eChecks. Dean almost couldn’t believe it when he realized he could “pay fast in seconds without any fees,” he said. Even better? The eChecks “quickly paid for themselves.”
3. Save yourself the late payment fees
Paying a late fee once or twice won’t necessarily break the bank. But if you pay late on a regular basis — ouch. Why not avoid late fees altogether by paying your bills in seconds with eChecks?
Albert Nunez, CEO of Capital Sun Group in Cabin John, Maryland, explained that his primary reason for trying Deluxe eChecks was to move money faster.
“With eChecks, I can send [subcontractors and vendors] a check, and they have it in a few minutes rather than a few days,” Nunez said.
4. Cut down on paper costs
Bank of America reports the cost of issuing a paper check can range anywhere from $4 to $20, based on the price of the check and shipping, plus the time employees spend writing, mailing, collecting and reconciling the check. The cost of postage alone can add up to a good chunk of change. According to Bill.com, businesses spend $235 on postage to mail 500 checks. And that’s not even factoring in the price of envelopes, specialty check stock, ink and printing. With a paperless payment process, such as eChecks, however, you only pay for the eChecks, which costs as little as $0.48 per eCheck.
5. Lower freight charges
Many vendors include freight charges in their invoices, which may prove costly for you. Instead of paying freight charges to the vendors, consider paying it to the carrier directly to save money. Just be sure to negotiate with multiple carriers to find the rate that works for you.
The more you ship, the lower your rate, so consider asking suppliers to ship on your company’s FedEx account number. This not only increases your business’ shipping volume and leads to cheaper rates, but it also prevents suppliers from padding their shipping costs.
6. Avoid wire transfer fees
Need to send money in a hurry? Don’t do a wire transfer just yet. With transaction fees ranging from $10 to $35 each, wire transfers can be costly to your business, especially if you’re sending them on a regular basis. That’s where eChecks can help.
For example, they helped Nunez successfully move tens of thousands of dollars to payees in the United States, Africa, the Caribbean and India. When moving large sums of money around the world, he likes eChecks because the payment is completed within seconds, but unlike wiring money, there is no hefty wiring fee.
7. Move to an online process
Switching to a digital process could help you save as much as 70 to 90 percent of your accounts payable costs. Considering labor, supply costs and processing time, a small business can save thousands per year by handling accounts payable online.
When it comes to finding ways to cut business costs, you don’t want to leave any stone unturned. Build these tips into your accounts payable strategy right now — and watch the savings start rolling in.