When businesses look to cut costs, they tend to move some of the functions abroad, however, this does not always necessarily reduce costs. It is important to re-evaluate your overseas spending and see where you can utilise on reducing them.
We have identified six strategies to further cut some of these overseas costs and ensure you are doing everything you can to build on your business successfully:
#1 Bad & Good Costs
In the world of business, we are always looking to find ways to reduce costs and boost profits. However, it is important to remember there needs to be good reasoning behind cutting costs, and those reasons must ensure that they will be profitable for the business.
Cost reduction needs to start by identifying the good costs from the bad costs. Good costs are those that will have a positive effect on the business (boosting profit & growing the business) and bad costs are unnecessary and avoidable spending areas. An example of this is a high-street store with low traffic – this involves big costs through rent/salaries and overheads with no real profit.
In addition to this, it is equally important to utilise the good costs more effectively, which means businesses need to have a reasonable understanding of which costs are good and bad, and which can be eliminated, reduced or increased.
#2 Limit Travel
When sending business overseas, owners often forget that it still needs to be managed. However, by reducing travel to these countries, you can save money very easily. When you add together flights, accommodation and general travel expenses you are looking at thousands of dollars.
Limit these expenses by moving meetings, business calls and annual check-ins online. For example, Slack can be used in workplace and acts like an instant messenger for employees, day-to-day chat can be moved here. Skype & Google Hangouts are also another fantastic way to conduct meetings as they allow a face-to-face connection, and this can be done all with an internet connection. Moving these meetings online is a perfect way to cut out those frequent travel expenses.
#3 Power of Technology
Research into business technologies and figure out how they can be adapted to your business overseas. Tools can be used to reduce the costs and break down the need for human labour. These types of tools can range from robotics, artificial intelligence, blockchain, payroll & accounting software. It all depends on your business, but it is worth checking out how technology can suit your business.
For example, you may have an employee overseas handling invoices and accounting, but this can be managed with software. This employee could work on an area where your business needs more attention.
#4 Work from Home
Businesses can have the perception that moving business overseas can cut costs, sometimes this isn’t correct, especially not with the cost of rent with office spaces.
In this case, you might want to consider non-traditional working methods. These can include working from home and using cloud computing systems. Services such as Google Drive & Office 365 allow all your work to sit on a server that can be accessed anywhere at any time with an internet connection, this is a great way to drop the cost of rent and overheads, plus who doesn’t love working from the comfort of own home?
#5 Local Outsourcing & Eliminate Duplication
It is smart to re-evaluate the costs at frequent intervals as you progress in your business journey. Here, we recommend reviewing your overseas departments and look at the costs of these in comparison to outsourcing locally in Australia.
While looking at this, it is important to review which departments are doing what, and if there is any activity that could be handled by one department, but is spread over two or more?
Put simply – can two tasks be handled by one employee, rather than having extra employees working on individual tasks. Maximise on the abilities of your overseas employees and merge their tasks where appropriate.
Remember the aim here is to not cut costs by overworking your employees but giving them an additional responsibility where you see fit. This is also another great way to build on your employees and let them progress higher in the company all while reducing costs.
#6 Compare Rates for International Payroll Transfers
When businesses send their work overseas, this means the costs shift from country to country, which can result in large transfer fees. With salaries being transferred frequently, expenses can arise. Transferring cash internationally can run the risks of the reliability, currency fluctuations and of course those pesky hidden bank fees.
Shop around and look at different ways you could send money overseas, the banks aren’t always the cheapest – so it’s best to look at different money transfer systems.
Remember to always evaluate the good and bad costs for your business, just because you’ve moved some services overseas doesn’t mean they will always work out cheaper. It is great to continually look for opportunities where costs can be cut or reduced and focus on what’s going to profit your business.
InstaReM is a leading cross-border payments company which has created a unique payment mesh in Asia-Pacific, which is being leveraged by financial institutions, SMEs and individuals to make fast low-cost cross-border payments. It has recently expanded into Europe and the United States. It powers local payments to more than 55+ countries, reaching out to 3.21 billion people across the globe.