Published May 25, 2017  in Finance Management

5 Actionable Tips to Reduce Operational Costs

Regardless of what the circumstances are for your business, it is always a priority to find ways to reduce operational costs. Doing so is the most efficient and effective way to save money without necessarily having a negative impact on services being rendered to customers or on salaries being paid to staff. Rather than causing problems in these areas, reducing operational costs in the right way has the additional benefit of improving business processes.

Through technology and the emergence of the outsourcing industry, companies can reduce costs, increase efficiencies, and increase profits to be in a better position to deal with the inevitable cyclical economic downturn.Michael Evans

Of course, it’s not quite as simple as looking at the money being spent and cutting back in a few areas.

The process needs to be more strategic than that to achieve the twin goals of saving money and refining processes in a way that would be beneficial to the business even without the reduction in operational costs. So here are the best ways to do just that.

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Automate And Refine Business Processes

The most effective way to reduce operational costs without a negative impact on the delivery of services is to bring in business process management software that automates processes that are currently being done manually.

Functions like accounting, marketing & communications, payroll, and HR, amongst others, can be at least partially automated using software programs and services, allowing staff to save time spent on these activities, thus offering cost savings for the business.

Some of the software you can use include:

Not only does this reduce operational costs in the sense of reducing man-hours spent on the tasks, but it has the additional benefit of making these functions more efficient by minimizing the risk of human error.

This means less money wasted on fixing these errors, making extra savings on top of the reduced expense of paying for the manual work. In addition, the increase in productivity from your staff after removing their repetitive tasks can help your business generate further income.

As well as automating your business processes to reduce operational costs, you should look in general at whether your processes are being managed efficiently and effectively.

Introducing business process management across the board is an excellent way to reduce costs, remove bottlenecks, improve workflow and boost productivity as well as eliminating silo mentality. It should also make your business more agile and forward-looking, more able to respond to change and be more competitive.


As well as identifying business processes that can be automated and managed by internal staff, businesses looking to reduce operational costs should also consider whether money can be saved by outsourcing functions to external agencies or consultants.

One of the most commonly outsourced business functions is marketing and communications, where there is so much competition in the marketplace that finding a reliable, innovative and results-driven business or freelancer to deliver for you does not necessarily mean spending a lot of money.

This is particularly helpful for small-to-medium businesses, who may not have the requirement for a full-time marketing or communications resource, and find it is more cost-effective to budget for a part-time or hourly-rated resource.

You can find freelancers & remote workers on some of these websites:

The same goes for digital marketing functions like search engine optimization and pay-per-click advertising, which is usually most effectively managed by agencies, again at competitive rates that work out cheaper than using internal staff, as well as more productive in terms of generating income.

Cut Down On Office Space

The days where a business needed all of its staff to be sat together in a large office are long gone.

Doing a proper analysis of desk occupancy over a few months is a good way of identifying whether you really need all the space you are paying for. At the very least you might be able to ascertain whether money can be saved by downsizing and introducing a hot desking scheme to allow fewer desks to be used, on the basis that there should always be enough available without staff having their own assigned desk.

At the very least you might be able to ascertain whether money can be saved by downsizing and introducing a hot desking scheme to allow fewer desks to be used, on the basis that there should always be enough available without staff having their own assigned desk.

This is also an area where technology can be utilized to reduce operational costs via telecommuting, an increasingly popular practice that works to the benefit of both staff and business when managed effectively.

Emails, workflow messaging services and video conferencing (and, of course, telephones) mean that there’s no real loss of connectivity or accessibility with staff who are working from home as opposed to those sitting in the office. Meanwhile, the staff is saving time and money on their commutes as well as enjoying the ability work in a more relaxed setting.

This means that even less actual office space is required, allowing some businesses to start working from shared workspaces with a minimum of overheads, making huge savings on their operational costs.

Telecommuting also expands the potential pool of staff beyond geographical boundaries, as someone from another country is as able to work for you as someone who lives over the road from your headquarters. As well as potentially able to cut costs by not having to have desk space for them, you can also save money on wages, without compromising on quality.

For managing a remote team, you can use project management software such as:

Go Green And Reduce Operational Costs

This is another area where you can reduce operational costs at the same time as generating other benefits for your business, and in this instance, the planet as a whole.

There are enormous cost savings to be made by looking at the way your business consumes resources as part of a low carbon scheme, and doing so is an excellent way to demonstrate corporate social responsibility by doing something to reducing your environmental impact.

All businesses have money that they could save by reducing the amount of wastage of resources and money spent on things like unnecessary printing in offices and reducing emissions in manufacturing businesses. Energy bills can be slashed by using greener solutions for lighting and heating.

Sustainability and cutting down on waste not only makes more sense for the planet, but it almost always makes more sense for the balance books as well, particularly with some governments incentivizing green schemes like these.

Improve Financial Processes

Finance is – obviously – an area where you can reduce operational costs simply by running more efficiently. If your business regularly pays invoices late, this can incur late fees and penalties, which is an unnecessary cost, particularly as many companies will offer a discount if you actually pay earlier than required.

This is a simple way for you to save money by operating in a more effective manner, and if you have got the right processes in place, it shouldn’t require any extra work or effort.

These are a few ways that your business can reduce operational costs, so if you want to find out more about how business process management software can transform the way you operate, why not book a free demo of Tallyfy’s software and we can demonstrate just how much your business will benefit.

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