Spend Control

Financial Waste Sucks. Here’s 5 Ways Your Business Can Reduce It

Learn about what financial waste is and how it affects small businesses, plus 5 tips on how you can reduce your financial waste.

Danielle Antosz
Danielle Antosz writes about business, tech, and finance for ClearSpend. When she's not researching weird facts about business finance, you'll find her looking for her next favorite sci-fi show. Stalk her on Twitter @dantosz.

As a small business, you need to run a tight ship. A tight financial ship, that is. While your business likely isn't wasting money on $10 lattes and avocado toast, there's a good chance you are wasting money—and that can be a death sentence for your business. 

What exactly is financial waste and how do you reduce it? So glad you asked. 

At ClearSpend, we know a thing or two about financial waste. In fact, we're in the business of helping small businesses reduce their financial waste and get a handle on expenses. But first, let's talk about what, exactly, financial waste is. 

What is financial waste? 

Financial waste from a business perspective is any money you spend that doesn't deliver returns. If you're spending cash on things you don't need, your business is wasting valuable resources that could be invested elsewhere. 

In some cases, you definitely need to spend money to make money, but other times you're just throwing money away. That's a financial waste.  

To be clear, not every dollar you spend needs to have a clear, direct ROI. Buying a prospect dinner during the closing process isn't financial waste. A weekly office breakfast isn't necessarily financial waste. The expense management tool that costs an arm and a leg but no one actually uses? 😬 That's financial waste.

How does financial waste affect small businesses?

If you have more money than you know what to do with, feel free to waste all the cash you want—we won't judge. 

The reality is most businesses don't have enough money. Small businesses in particular often struggle to keep costs under control. And according to CB Insights, running out of cash is the top reason startups fail. Don't let that be you. 

Plus, there's an opportunity cost to financial waste. If you spent $1,000 a year on sales software you don't use, that's $1,000 you could have invested in training, advertising, or, you know, avocado toast. 

Other impacts of financial waste include: 

  • Inability to scale 
  • Lack of funds to hire new talent 
  • Less able to pay off loans (so you pay more interest!) 
  • Limited funds to invest in community outreach 

Depending on your business, wasting money could also impact your ability to get better rates from vendors, take out business lines of credit, or invest in technology to help your organization compete. 

5 ways to reduce financial waste (and grow profits) 

How do you protect your business and reduce your financial waste? Start by reviewing your business accounts to see where your money is going. Then, use the tips below to find and eliminate wasted spend. 

1. Stop wasting money on advertising that doesn't deliver

There are dozens of marketing channels, hundreds of tools—and a lot of acronyms. It's easy to get bogged down by buzzwords and marketing "experts." Marketing can quickly turn into a money pit if you aren't careful. 

Instead of jumping to create content for the next new Insta-tok-gram platform, take it slow. If you need a website, build one using a tool like WordPress or Webflow. Choose one or two social platforms that you know your customers use. 

You don't have to waste time and money investing in every new marketing strategy. Start small, track ROI, and focus on what works. 

2. Cancel that software you never use 

There's a tool for everything. Which is amazing as a small business owner. You can manage social media, track sales, generate reports, send emails, even automatically send users resources via a chatbot. 

Most of these tools offer a free or cheap version, so you try it out. But then you get busy—did you cancel that free trial or did it charge you for a full version? Run an audit of all your subscriptions and ensure you use the tools you pay for. If you do use them, check your plan. There might be a cheaper version with the features you need. 

3. Reduce your fraud risks 

The Association of Certified Fraud Examiners reported businesses lost $7 billion in 2018 due to fraud. As a small business, you're unlikely to lose millions without noticing, but fraud can still impact your bottom line. 

Business lose up to $7 billion a year due to fraud

To reduce fraud risks, make sure to segregate accounting duties and run audits on a regular basis. Using spend control platforms (like ClearSpend) can also reduce expense fraud and protect you from financial waste.   

4. Don't invest in expensive office spaces unless you need them 

It's tempting to invest in those expensive desk chairs, standing desks, or that fancy coffee machine for the break room. You want your employees to be happy. And, let's be honest, some of that stuff is just plain cool. 

But in today's digital world, most workers can do some or all of their job remotely. Invest in tools and platforms that help you collaborate remotely and save the cash to invest in growth.

If you do need office space, opt for flexible seating options, like hot seats and reservable desks, rather than giving everyone an assigned seat. This setup saves space, especially for hybrid remote companies. 

5. Compare your insurance options   

Business insurance is a good thing. It can protect your investments, ensure your personal assets are covered, and sometimes it's legally required. We're not saying cancel your insurance! 

Instead, make sure you need the insurance you have and shop around for better rates. You may be able to reduce your coverage or even combine policies and spend less for the same coverage. 

How ClearSpend can help you reduce financial waste

ClearSpend is a spend management solution that reduces financial waste with powerful spend controls, cards with pre-set limits and restrictions, and the elimination of expense reports. 

Yes really. No more employee reimbursements or spreadsheets. All you need is an EIN number to qualify for ClearSpend. There are no spending requirements—which isn’t true for many spend management systems. 

Even better, it takes just minutes to sign up and it’s 100% free to use. 

How does it work? Once you get registered, you can start issuing business cards right away. Set spending rules for each employee (no more $25 lattes!), even limit categories, and you’re done. If your office manager is thinking about flying to Reno on your dime, you can nip it in the bud before they get the chance. 

Transactions, categories, and receipts automatically flow into the ClearSpend dashboard so you can monitor spending in real-time. Got questions? You can get in touch with a real live person right here at ClearSpend. It's that simple. 

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