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5 Tips For Cutting Cost and Improving Profitability

Naturally, positive cash flow is recommended because it means that your company is running smoothly. If you manage to have high positive cash flow, you will be able to make new investments (hire employees, open another location). That is the only way if you want your business to grow.


You should also think about including purchase approvals in your spending policy. In order to do that, you will need to involve your employees to make request for purchase approval and forward it by email to somebody with authority to approve it or this can be automated by using an E-procurement system.


Besides purchase approvals, you should also include Travel and Expense (T&E) reimbursement policy. The policy should provide guidelines on what is reimbursable and what is not reimbursable.


If you run the small business and want to reduce your spend, you should focus on getting better visibility into your spend. That will help you not just with understanding where you are spending money but it also with identifying opportunities for cutting spend (cost avoidance) or opportunities where you can get better price for the same product or service (Cost savings).


Cash inflow is the core of your company and comes from different sources – payments from customers, interest on savings or investments, receipt of a loan, monetary infusion from an investor, etc. Cash is very important because you will need it to pay for things that make your business run such as expenses like stock or raw materials, employees, rent and other operating expenses.



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