Learning to manage business expenses is a very important step to take as a business owner. As businesses grow and evolve, financial management becomes an increasingly important responsibility.
For many, it’s an unfortunate truth: running a business takes long hours and a lot of hard work, and this means tasks like tracking expenses can easily fall by the wayside. But this important job plays a critical role in successfully managing your cash flow, and inevitably, the sustainable success of running your business.
What many business owners fail to realize, however, is that there are a number of technological changes you can make to help take better control of your finances. IT is a significant cost for most businesses. Which also means it offers lots of opportunities to bring those costs down.
Whether it’s cutting expenses, tracking spending, or preventing costly expenditures, IT can play a major role in the financial obligations of running a business.
Here are four changes you can make within the technological structure of your business that can have a positive impact on your expenses.
Migrate to the cloud
What is the cloud? Where is the cloud? What does the cloud actually do?
These are all questions you’ve likely heard or even asked yourself. If you’re not tech-savvy, cloud computing and its benefits can often be a complex subject.
But with an increasing number of businesses adopting the cloud and using it in their day-to-day activities, it’s important to understand the impact it can have on your business - especially as it relates to your finances.
Put simply, cloud computing provides access to business data and applications from anywhere, at any time, on any device - all at a reasonable service price when compared with the cost of hosting servers in-house.
Speaking in dollars and cents, cloud systems run on a subscription basis, meaning that access is offered on a per-month, per-user basis, rather than a costly, up-front investment. In addition, cloud users typically only pay for the services they use, and can scale their services up or down as their business demands.
The cloud model is also advantageous for businesses as it allows you to pay just for what you need. Extra costs aren’t wasted on unnecessary storage space, pricey hardware, or tedious maintenance and repairs.
And you often don't need to pay for customer service or support, which is a huge advantage compared with hiring engineers to run services in-house.
Heighten your cybersecurity strategy
According to CSO Online, data breaches cost businesses $8.19 million on average. Which is, frankly, an astonishing number. Whereas investing in a technology-driven cybersecurity strategy can help you prevent and avoid the costly repercussions of a data breach.
A major cyber risk that many businesses are currently facing is remote work. Because of the safety measures taken as a result of the COVID-19 pandemic, most organizations have opted to work from home until future notice.
However, because this change occurred so quickly, these organizations don’t have the proper infrastructure in place to defend from impending cyber risks.
Because remote work is anticipated to become more popular even after the pandemic subsides, it’s vital that you equip your business with the adequate cybersecurity measures. This might include utilizing antivirus software, installing a VPN, or deploying an SD-WAN solution.
It’s easy to assume that your business won’t be the one affected by a potential data breach, and that putting these measures in place isn’t necessary.
However, from lost business to regulatory fines and remediation costs, the consequences of a data breach can cause devastating financial losses that affect an organization for years.
Digitize your business banking
Not only can technology help business owners avoid unwanted expenses, but it can also help them more effectively manage their current cash flow. Financial service providers have evolved to better fit the needs of today’s consumers by shifting to more digitized platforms.
Sweeping the financial services industry are neobanks (or challenger banks), which are digital- or mobile-only banks with no physical locations. These banks provide users with basic financial services such as checking and savings accounts and money-transfer services, with the added convenience of smartphone or digital device management.
An August 2019 survey from Finder.com and Pureprofile found that 57% of its respondents believed that digital banking is more convenient than brick-and-mortars, and 8.8% of the respondents intended to open a digital-only bank account in the coming months.
Business owners can also glean these same benefits, as challenger banks are becoming available for business banking capabilities as well. In addition to simple and accessible financial management, mobile business banks also have added features like no-fee ATM deposit and withdrawals that can help business owners save money along the way.
Audit software for unnecessary licenses
Most business software isn’t free, and yet many businesses often pay for licenses they don’t actually need. As reported by CIO online, organizations in the US alone wasted $30 billion on unused software over the course of a four-year study. This underused or unused (yet money-draining) software is often referred to as shelfware.
But how can shelfware be avoided? A great place to start is by conducting a software audit, which will help to identify the computers on your network and the software installed on them. From there, you can see which licenses are actually necessary and which you may be able to terminate or renegotiate.
With usage data in hand, a business can negotiate contracts at renewal time to bring the number of licenses they hold down to what they really need. For example, organizations often fail to terminate licenses because they don’t have a formal workflow in place to make adjustments when a user leaves the organization or changes responsibilities.
In some cases, licenses may simply be “reharvested,” moving to a central resource pool until they’re needed again.
As is the case for many business expenses, it’s always beneficial to review your software licenses in order to determine which are still useful and used consistently, and which can be cut to reduce costs.
Keep your IT budget in check
As a business owner, learning to navigate and manage your business budget in a productive way can be a challenge. Be sure to consistently review your expenses with a critical eye to best find opportunities to reduce costs, improve cash flow, and enhance the success of your business.
Technology is one of these highly impactful but often ignored costs for many companies. Subscriptions and licenses tend to float beneath the surface, considered too complicated or too essential to track adequately.
But it's important precisely because it's so impactful. Renegotiating or cancelling one big license can easily save more money than cracking down on client lunches or office perks. And we've already seen the potential catastrophe that poor security can lead to.
Take IT budgets seriously, and create a healthy expense profile for the whole company.