5 ways to cut business costs and boost efficiency

Many companies would say that the best ways to cut costs in business is to focus on improving operational efficiency and reducing spending in the following areas:

• Office space
• Out of pocket expenses
• Supply costs
• Advertising costs

While it is true that these areas contribute to a large percentage of the cost for any company, there is a single solution that can significantly address inefficiencies — with digital payments! 

Transitioning operations to a digital payments platform will increase productivity, mitigate error, and provide the transparency and the data to inform future strategies that work.

Industries are adopting digital solutions for all aspects of business, the payment industry is no different. Companies like WEX are looking to technology to cut costs by streamlining complex business payments simultaneously and become more competitive in the market.

The top 5 solutions start with integration and ERP

Enterprise Resource Planning (ERP) is a digital solution that was developed to address operational efficiency across all business units, including inventory and supply management, human resources, customer service and CRM, financial management and payments.

ERP software is integral in streamlining processes by integrating these business functions and information into a single and complete system database that can be accessed by the entire organization. This shared database provides employees across all divisions and business functions with visibility to specific information needed to accomplish their tasks. The system also creates continuity and accuracy in ways never before possible in business.

Once an ERP system is in place, additional digital solutions can be integrated, further strengthening the financial supply chain and cutting costs through efficiency and transparency. Because these systems are cloud based, it can eliminate the need for some systems hardware as well, leading to savings on overhead.

A digital, cloud-based platform can apply savings to each cost center mentioned above while automation will drive profitability as well. Payment companies like WEX have developed products and systems that can be integrated seamlessly into any ERP platform.

In the complex world of business payments, these 5 solutions offer cost savings and improved operational efficiency.

1. Use virtual solutions to automate accounts payable

Business.com’s Jennifer Dublino says the trick to reducing operational costs is by embracing technology. Digitize processes wherever applicable to save time. Automation is your friend – consider using an accounts payable automation solution to simplify your payment process and generate new revenue opportunities through rebates. 

The minimal amount of manual inputs not only reduces error rates, but also eases debtor management requirements and improves cash flow for the supplier.

The electronic processing of invoices and payments helps improve the overall operational efficiencies for the buyer and supplier.

2. Payment platforms integrating with ERPs

Payment platforms integrating with ERPs provide a seamless way to process payments, regardless of payment type. Bank agnostic platforms are designed to provide complete transparency and accountability for all supplier payment methods including virtual cards, ACH, and check.

• 100% electronic payments from day one
• Cost savings
• Increased security
• Improved supplier relations
• Flexible payment options (virtual cards, ACH, check)
• Greater overall visibility
• Bank agnostic network and platform

3. Use virtual card solutions for more efficient transacting

Traditional payment methods can be slow and inefficient. Virtual cards offer a more secure and quicker solution. By eliminating the need for paper checks and manual processing, virtual cards can significantly reduce the cost and complexity of your procure-to-pay process. 

A virtual card provides information for automatic reconciliation of entries which is quicker and more efficient than a manual system. This reduces the number of disputed entries and allows for better settlement processes.

Key benefits of virtual cards:

• Enhanced security: Virtual cards provide greater security than traditional payment methods by reducing the risk of fraud and unauthorized transactions.

• Faster transactions: Virtual cards enable quick and easy payments, streamlining your procurement process and improving cash flow.

• Revenue-generating opportunities: Many virtual card programs offer rebate opportunities, allowing you to earn rewards on your purchases.

By switching to virtual cards, you can achieve significant efficiency savings and find new opportunities to optimize your business operations.

4. Use Big Data to better understand your business finances

Before you can control your company’s spending, you have to understand it. While the purchase of critical materials is top-of-mind for most businesses, indirect costs like travel, office supplies, and out-of-pocket expenses are often left unmonitored, resulting in overspending.

Analytics and reporting shows you where your company spends money, on what and with which vendors. A deeper dive reveals outliers, variances and specific categories for a detailed picture of business expenses. Identify cost-saving opportunities, rein in out-of-policy expenses and target categories for strategic sourcing.

5. Use mobile wallets and apps for more convenience

As with most digital solutions there are efficiencies and cost savings, but mobile efficiencies are magnified by the digital solution in the palm of your hand. While there are many mobile solutions that save time and money, in the payment sector that generally means managing bank accounts and funds. Here are a few of the functions that a mobile app or mobile wallet can provide:

• Get real-time card balances and recent transaction details
• Transfer funds from within the account or to external accounts
• Register and deposit checks
• Tap-to-pay convenience

What we are quickly learning is that in order to ease the world of complex business payments, digital is the answer and is providing more than just a way to cut costs. These five solutions work to save money while simultaneously enhancing efficiencies, driving profitability and strengthening the financial supply chain for companies of all sizes.

For more insights and updates on corporate payments, check out:

• Your guide to virtual card rebates
• Current trends in finance
• Accounts payables: Terms you need to know

Learn more about how WEX payment solutions can be tailored to your business, so you can accelerate and streamline operations while creating lasting growth and success for your organization.

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The information in this blog post is for educational purposes only. It is not legal or tax advice. For legal or tax advice, you should consult your own legal counsel, tax, and investment advisers.

Editorial note: This article was originally published on March 27, 2018, and has been updated for this publication.

Sources:
Business.com