How to save money for a small business

Businesses exist to make money, but everybody has overheads too. With these simple money saving tips for small businesses, you can target savings in your expenses as a way to maximise profits.

We’ve focused on some of the main areas where all SMEs can typically stand to make at least some savings, but it’s also worth sitting down and looking at any costs that are unique to your niche, and whether or not there might be ways to reduce your outgoings there too.

Cut credit

When you’re first starting out, it might be impossible to get by without using any credit at all, but you can be more efficient by using the forms of credit that are available to you with the lowest interest rates.

If your cash flow is fairly healthy, it can be better to use a debit card to spend the money you have in your account, rather than running up a credit card bill by using an interest-charging plastic as a source of petty cash.

Be smart about things like ATM withdrawals too, as if you’re paying a fee per transaction, withdrawing a larger amount of cash in one go can save compared to several smaller withdrawals – it all adds up over time.

Prompt payment

Encourage prompt payment from anyone who owes you money. It can even be worth offering a small discount for invoices settled within seven days, rather than closer to their 30-day deadline.

Make sure you have clear payment terms agreed upfront so you can enforce invoice deadlines, and unless you are worried about losing a valued client, don’t be afraid to enforce terms like statutory interest and overdue fees.

The benefits of doing so are several – obviously there is the possibility of raising more income by making people pay you the interest on overdue invoices, but in practice this happens relatively rarely.

However, what you can do is use those extra fees as leverage by saying you will waive them if the full original invoice amount is paid immediately – and this is often all it takes to get an overdue client’s money into your business account.

Pay on time

This time it’s about your own payments, and it’s important to make sure you settle invoices on time unless it’s impossible to do so.

Paying suppliers promptly helps to get you in their good books, and might even get you a discount – on the other hand if you pay late, you risk penalties and interest, and could even find yourself moved on to a cash on delivery payment plan.

That can be disastrous for small businesses – if you’re waiting 30 days for money coming in, but forced on to same-day payment terms for money going out, your cash flow is bound to feel the squeeze eventually.


It’s not always the most economical option to do things in-house, so consider outsourcing when it’s appropriate to do so, and always be on the lookout for new service providers who could take some of the weight off of your shoulders.

The benefit of outsourcing is that it’s generally a ‘pay as you go’ kind of model – you only get charged for the hours you use – and that can make it more cost efficient than hiring a new full-time member of staff to do a job that doesn’t take full-time hours, but is beyond the scope of a part-time employee.

You can always use outsourcing as a precursor to hiring someone in-house too, and it can save on costs if you’ve had an outsourced supplier lay the groundwork so you can bring someone in and give them a running start.

Target growth

Don’t just save money – make more of it too. Targeting growth can help you to increase your income, and that means any areas of inefficiency should be less significant in the grand scheme of things.

Of course you should still be alert to any areas where you could make some cutbacks to increase your profit margins even more, but this is doubly effective when it’s combined with increased earnings at the top end.

Ultimately in business it’s a balance between profit and loss – and more money coming in will always help to overcome any money going out.

So keep looking for opportunities for growth and expansion, even if it’s just by increasing your prices in times of peak demand, and you’ll be well on your way to making more money even if you can’t find ways to save on your spending.