As we enter a new year, many companies are setting and working toward ambitious financial goals. A large part of achieving these goals is effectively getting spend management under control. Here are 7 tips for leveling up your expense management practices in the new year and beyond.
1. Be flexible
Keep a portion of the budget unallocated to preserve a health margin of flexibility for future projects, unexpected circumstances, and possible miscalculations.
2. Assign a point person to each budget
When everyone is responsible, effectively no one is responsible. Give one point person agency over each portion of the budget. Regularly meet with these individuals together and 1:1 to ensure that spending targets are met.
3. Have regular feedback sessions
Bring the individual departments together with finance and accounting for monthly feedback sessions at the granular level of spend to better understand possible errors, incorrect predictions or assumptions, and opportunities for efficiency. While budgets are often set on a quarterly or even annual basis, it is helpful to use these more regular feedback sessions as an opportunity to refine strategy and propose amendments.
4. Be organized
Oftentimes expense increases come from things like late fees or premium prices that you have to pay partners, suppliers, and contractors for last minute requests. Get to the root of the problem by orienting your company to prioritize organization and time management.
5. Improve your negotiation skills
Frequently, there is room for discounts in supplier relationships, especially when you are buying regularly and/or in large quantities. Instead of taking whatever price is given to you, politely but firmly push back. Set a goal of saving, say 5% or even 10%, on the average offered price and increase this target as appropriate as you refine your negotiation tactics.
6. Understand what matters to employees
While boosting employee morale is crucial, you may be spending copious amounts on things they care less about. Have a feedback session with employees to better understand what they really care about. Sometimes their priorities while meaningful are not monetarily expensive, which can lead to a win win situation!
7. Keep track of miscellaneous supply inventory
Wasted cups and printer cartridges and paper towels really do add up! While it is important to not be too miserly, waste is never great for the budget nor the environment, and being responsible around tracking inventory is hardly an extreme ask. Keep your supplies in a centralized, organized location and avoid over ordering or last minute purchases that can lead to excessive spend or emergency prices.