Steps To Help Reduce Costs In The Face Of Growing Wages

Thursday, 10 Oct 2019

Small and medium-sized businesses are always plagued with the challenge of maintaining the flow of capital and limiting their expenses. Salaries and wages form a significant part of the costs incurred by an organisation, and any hike in this component can throw the business into disarray.

The recent announcement of the Fair Work Commission to increase the national minimum wage by 3% to $19.49 per hour created a panic wave among the business owners in Melbourne. The increased rate is applicable from the first full pay period beginning on or after 1 July 2019.

The rising cost has made organisations rethink their annual budget and even consider downsizing. However, expert bookkeepers in Melbourne suggest that it is time to reduce costs rather than waiving off the staff. It is quite possible to balance your expenses with hiked wages if you can work on your savings and improve productivity.

If your business has been struggling with the financial impact of the announcement, take a look at the steps mentioned below to cut costs in the face of growing wages.

Cut Down On Redundant Expenses

The most vital part of managing your finances is to hire a professional bookkeeper who can keep a tab on the expenses. A qualified and experienced bookkeeper will be able to determine which part of your budget is getting wasted and how this money can be utilised for other significant work.

Bookkeepers can also help in rearranging money in the payroll within your existing budget by restricting irrelevant expenses. They will suggest investing available capital in projects that will generate a higher ROI so that the cash flow is not affected.

Compliance Is Better Than Paying Fines

The point to be noted here is that you must follow the increase in minimum wages as non-compliance can cost you dearly. If you are found making changes to the regulation, your organisation will lose its standing in the community and industry.

Thus you must enter into enterprise agreements with all your employees and abide by the pay regulations put forth by the Fair Work Commission. All organisations in Melbourne have to maintain fairness in the workplace to ensure integrity. Your bookkeeper can assist you in managing the payroll according to the new rules.

Increase Prices of Your Goods And Services

Another way to ensure that there is least impact of rise in minimum wages on your organisation is to increase the price of your offerings. The climbing labour costs can be balanced by relying on market equilibrium which leads to inflation.

It means that paycheques will be bigger, but goods and services will be costlier, thus bringing the balance back in the market. It does not reduce the demand as competitors have to follow suit and increase their prices to deal with the enlarged expenses. Naturally, the financial burden is passed on to the customers.

Claim Small Business Tax Deductions

Your bookkeepers will advise you on claiming tax deductions that can cut down on your taxes. In many cases, the business owners are not aware of these deductions and end up paying more than what they should.

A bookkeeper can help in such a scenario by providing information about all the applicable tax deductions, including the deduction for staff salaries, wages and super contributions. These deductions can be claimed by every company or trust located in Melbourne.

Decrease The Trading Hours

Your bookkeeper can suggest a number of ways of coping with the financial impact of increased wages, and one of them is reducing the number of working hours. It is a better option than letting people go.

A lot of time, small businesses in Melbourne have to pay overtime which increases their costs. So you must refrain from making your employees work beyond their routine hours. Also, you can bring down the trading hours to meet the budget goals.

However, it can affect the productivity of the business as you will have fewer hours available for the same amount of work. So take your decision after considering all options with your bookkeeper. It will not be difficult for full-time employees to become part-time workers if the other alternative in front of them is losing their job.

Take Advantage of Energy Saving Strategies

Businesses often overlook the costs incurred by the usage of electricity. The energy bills form a significant part of the expenditure and the prices keep rising year-on-year. You can implement energy-saving strategies in your office space by using double glazed and insulated windows, energy-efficient lights and appliances, etc.

So make sure that your equipment and HVAC is energy efficient. If it is possible, you can also invest in acquiring a solar power system which can prove highly cost-efficient and save the environment too.

Start Automating Your Processes

You can improve the output of your organisation by switching to online tools that help in automating processes. As you are less dependent on your workforce, you can reduce their work hours and begin utilising software for most tasks.

One such tool is Hootsuite, a social media management platform, which aids in managing all the social media profiles from one dashboard and measures the effectiveness of posts and campaigns.

You can also use Alexa Internet which helps you to analyse the performance of your business website and also of your competitors. Xero bookkeeping software is another advantageous tool that saves a lot of time and effort which in turn helps in saving money.

Upgrade Your Staff

Organisations in Melbourne spend heavily on training and upgrading the staff which can be slashed by hiring skilled employees in the first place. The recruitment process must screen the candidates on the basis of their experience and knowledge.

Also, they must fit into your budget. Such qualified people can prove to be valuable assets as they can suggest various improvements and enhance the efficiency of various processes.

A self-driven employee can help in motivating the entire team and take the organisation to the next level. For example, hiring professional bookkeeping company is cheaper than training an in-house employee in the task.

Conclusion

The new minimum wage rule should not put you in panic mode and frantically look at downsizing. You must consult your bookkeeper in Melbourne to manage the finances in the best possible way by cutting back on unnecessary expenses.

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