Overlooked business costs can massively impact a company’s bottom line. While many of the significant expenses, such as wages, bills, insurance, and supplies, are easily factored into the budget, there can often be overlooked payments you make on a regular or semi-regular basis that are flying under the radar but doing significant damage to your cash flow. With cash flow being the number one cause of business failure, getting to the bottom of issues affecting your cash flow can help you avoid this all-too-common pitfall.

Payment Processing Fees

When you use a payment processor, the company you partner with will charge fees for this activity. These fees can quickly add up and include set-up costs, transaction fees, chargeback fees, and more. Understanding these charges and the reasons behind their application is crucial. For instance, a sports betting merchant account will have a better understanding of the sector and can offer more favorable terms and conditions. By being aware of what you are paying, you can accommodate this into your pricing structure or outgoings, ensuring it doesn’t catch you off guard.

Employee Turnover Costs

Did you know replacing an employee can cost you around 50 to 200% of their annual turnover? Hiring and training employees can be a significant expense, eating into your budget. Furthermore, continually advertising for new employees and going through the hiring process again can be costly, and you must absorb these expenses. 

By investing in employee retention strategies, you can significantly reduce hiring costs and limit turnover. This not only benefits your company financially but also fosters a positive work environment. It’s a win-win situation that can boost morale and productivity.

Maintenance and Upgrades

Any equipment you use, including vehicles, requires ongoing maintenance and upgrades periodically. Neglecting to account for these costs can leave you vulnerable when you experience significant breakdowns or struggle to budget effectively.

When you bring new equipment or tools on board that are essential to your work, you need to look beyond the initial purchase costs of the item and consider the associated costs of repairs, regular servicing, and other maintenance needs to budget effectively for these expenses. This could include items such as computers and laptops for employees, desks, chairs, car services, repairs, and technology upgrades. 

SaaS

Software as a service (SaaS) is valuable for many industries, and the majority of businesses have multiple SaaS solutions (typically, these are around 40 for companies with fewer than 200 employees and 103 for companies employing up to 750 staff members).

These costs can quickly add up, and if you actually add a new SaaS on top of existing ones as you think you need to, you are most likely wasting money.  

Conducting regular audits of the SaaS you have and investigating how each one is being utilized is a proactive step. It helps you ensure you’re not paying for the same features and that you’re getting the best package from each provider. This level of control over your expenses can give you peace of mind and help you avoid unnecessary costs.

Compliance and Legal Fees

You need to stay compliant and legal regardless of whatever industry you are in, and these fees can add up quickly. Fees for registrations, compliance tools such as software for data protection or regulatory compliance, training, tax filing, accountants, licenses, and permits are all costs you need to cover on a month-by-month or annual basis to ensure you’re utilizing all the required resources to retain your compliance and ensure you’re operating legally. 

Neglecting to stay compliant can land you in legal hot water and put you at risk of fines and prosecution, so it’s important that you don’t overlook the service of compliance and you factor all associated costs into your budget.

Shrinkage and Inventory Loss

Shrinking and loss of inventory are something most businesses, especially those in the food, retail, and manufacturing sectors, experience at varying levels. While these costs may be higher in the first 12 months, for example, they will still be present and could always be factored into your budget. No business operates entirely without any loss, shrinkage, or waste, and you need to be aware of factors that contribute to this, such as employee or customer theft, non-payment of services rendered, administrative errors, and damaged or expired inventory. The more you account for these costs, the more effective your budget planning will be and the easier it will be to track your cash flow.