With the current economic climate having a big impact on quarterly success, Chief Financial Officers are having to get creative to ensure economic gains are achieved. This process most often starts by conducting a thorough analysis of the company’s costs to identify areas where savings can be made.
So far, we’ve seen hundreds of public and private corporations make cost cutting measures through employee layoffs and the adoption of remote work. However, there are several more ways to better prepare for the future as well as earn savings in 2023. Here is your guide to greater financial success in 2023!
There are several potential ways that businesses could achieve cost savings in 2023. Here are some of the best examples:
Automation technologies can help businesses streamline processes and reduce the need for human labor, resulting in cost savings over time. A report by Gartner predicts that by 2024, at least 75% of businesses will have incorporated automation technologies into their operations. This may include automating accounting and financial reporting processes, or implementing digital procurement tools to improve supply chain management.
Businesses can use automatic mileage tracking to streamline expense tracking, improve accuracy in tax reporting, and save time and effort. If your employees use their personal vehicles for work-related tasks, a software like MileIQ for Teams becomes an advantageous tool to your company. By accurating logging employee mileage or company-owned fleets, both you and your employees can save big during tax season.
The pandemic forced businesses to reevaluate the workplace landscape for several years. And now in 2023, as financial forecasts show the number of remote jobs are on track to increase, businesses have an even greater opportunity to save money on office space, utilities, and other related expenses. It may be the time to stop hybrid working once and for all.
There are several state and federal tax credits that small businesses can take advantage of, yet few business owners actually take the time to learn about these incentives. Aside from the mileage deduction, CFOs should take a closer look at the company’s overall tax standing to determine which tax credits apply. Some examples include Credit for Increasing Research Activities (Form 6765), New Markets Credit (Form 8874) and Tax Credit for Small Employer Pension Plan Startup Costs and Auto-Enrollment (Form 8881).
The progression towards more sustainable practices shows no signing of slowing down in 2023. Many companies are making headway by upgrading to energy-efficient vehicles, reducing unnecessary energy usage through utility bills and investing in clean energy sources, such as solar panels.
CFO’s also have an opportunity to outsource non-core functions in an effort to reduce employee overhead costs. Roles such as accounting, IT, and human resources can be contracted on a by-needs basis instead of being a payrolled position throughout the year.
These are just a few examples of ways that businesses could achieve cost savings in 2023. The specific strategies that would work best for a particular business would depend on a variety of factors, including industry, size, and operational needs.
According to a report by McKinsey, companies that have applied cost optimization measures have achieved savings of between 10% and 30% of their operating costs. The report also suggests that cost optimization will remain a key priority for businesses in the post-pandemic era. Meaning, future budgeting and spending decisions will largely be based on maximizing savings versus business expansion.
Another report by Deloitte found that 70% of companies surveyed planned to focus on cost reduction measures in 2021 and beyond. The report also notes that businesses that have successfully implemented cost reduction strategies tend to be those that have made cost management a part of their culture. This includes having established effective processes for tracking and measuring cost savings.
In general, cost savings will continue to be an important consideration for businesses in the coming years. For 2023, in particular, companies should focus their efforts on automation and similar technologies that scale down the business model for better economic efficiency. The sooner you implement strategies such as automatic mileage tracking into your company policy, the quicker you’ll see a reduction in business expenses.
Are you a business owner and ready to start saving? Sign up for MileIQ for Teams today!