# Back to basics for cost control as the usual levers lose value Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-10-17 Category: FINANCE Category URL: https://financedigest.com/category/finance Meta Title: UK Businesses Facing Severe Cost Pressures | Expert Insights Meta Description: Discover how process automation can help mitigate the impact of rising costs on your business quickly and affordably. Don't be left behind in the current URL: https://financedigest.com/back-to-basics-for-cost-control-as-the-usual-levers-lose-valuehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/a-finger-adding-up-figures-using-a-calculator-isolated-over-a-white-background-sbi-3010418372-1736815014630-compressed.jpg) _By_ **_Mark Blakemore,_** _Chief Financial Officer at_ [_Compleat Software_](https://www.compleatsoftware.com/) _, the purchase-to-pay software house._ Barely a week passes now without further depressing developments compounding the severe [cost pressures already being experienced by businesses](https://www.financedigest.com/cutting-business-costs-pros-of-using-commercial-heat-pumps-in-2016.html "Cutting business costs: Pros of using commercial heat pumps in 2016"). In the UK, those developments include the near parity of sterling with the US dollar, further [pushing up the cost of trading](https://www.financedigest.com/eu-recovers-appetite-for-trade-in-green-industry-push.html "EU recovers appetite for trade in green industry push") for many companies. Responding to the UK Chancellor’s ‘Mini Budget’ in mid-September, James Watt, founder and CEO of BrewDog in Scotland, said the latest measures, which had led to the pound’s slump in value, had made the current financial crisis ‘far, far worse’ than it might [have been](https://www.aberdeenlive.news/news/a-startling-display-incompetence-brewdog-7632795). BrewDog’s exposure to US costs mean that the company’s expenditure – already up a third in 2021, leading to bar closures – has now ‘dramatically increased’. The [company is far from alone](https://www.financedigest.com/alone-together-how-to-maintain-a-positive-company-culture-while-working-remotely.html "Alone together: How to maintain a positive company culture while working remotely"). Every day, it seems, familiar high-street brands are closing their doors or reducing their hours of opening because they [can’t afford](https://www.financedigest.com/still-living-at-home-a-third-of-the-nation-cant-afford-to-rent.html "Still living at home? A third of the nation can’t afford to rent") the rising costs of energy, or to pay staff for more than core trading hours. ### **Crunch time** As the more obvious levers for cost cutting cease to make the required dent, [businesses are reaching](https://www.financedigest.com/aon-assists-freddie-mac-to-reach-5bn-risk-transfer-milestone-for-u-s-mortgage-credit-business.html "AON ASSISTS FREDDIE MAC TO REACH BN RISK TRANSFER MILESTONE FOR U.S. MORTGAGE CREDIT BUSINESS") crunch time. In the US, in June after the [inflation rate hit](https://www.financedigest.com/uk-shop-price-inflation-hits-record-8-in-january-brc-2.html "UK shop price inflation hits record 8% in January: BRC") 8.6% (the country’s highest in 40 years), two-thirds of small businesses said it was ‘very likely’ or ‘likely’ that they would have to close permanently if the rate didn’t come down (it is still above 8%). Businesses most in danger of closing have typically already been impacted by declines in revenue and customers, pandemic-related shutdowns, and supply-chain issues, making [inflated costs the final](https://www.financedigest.com/french-inflation-revised-upwards-in-february-to-7-3-final-figures.html "French inflation revised upwards in February to 7.3% – final figures") straw. The [survey](https://digital.com/inflation-may-force-2-in-3-small-businesses-to-close-in-2022/) by Digital.com of 1,000 owners and co-owners of small businesses with 500 or fewer employees, found that nearly four in 10 small businesses facing closure planned to lay off employees to stay afloat. Yet the more that companies cut back their staff, close locations, and reduce operating hours, the weaker their [position in the market and the harder it will be for them to pursue new growth](https://www.financedigest.com/leading-payment-platform-appoints-new-key-positions-to-help-with-growth.html "Leading Payment Platform Appoints New Key Positions to Help With Growth"). Clearly, these are ‘last resort’ decisions. Meanwhile, the option to pass additional costs onto the customer is extremely limited, as the rising [cost of living](https://www.financedigest.com/indefensible-uks-sunak-under-fire-over-response-to-cost-of-living-crisis.html "‘Indefensible’: UK’s Sunak under fire over response to cost of living crisis") (not to mention the onset of colder weather in the Northern hemisphere) continues to take its toll on everyone’s spending power. ### **As one year closes…** As many [businesses start to prepare their end-of-year accounts](https://www.financedigest.com/making-your-accountant-an-invaluable-asset-to-your-business.html "MAKING YOUR ACCOUNTANT AN INVALUABLE ASSET TO YOUR BUSINESS"), it is time to take stock. The adage of looking after the pennies in every pound, or the cents in every dollar, has never resonated more. It’s here that process automation gains new relevance, especially if this can be achieved quickly and affordably, without any [disruption to the business as usual](https://www.financedigest.com/despite-return-to-work-virtual-meetings-will-continue-to-disrupt-business-as-usual-in-finance.html "Despite Return to Work, Virtual Meetings Will Continue to Disrupt Business as Usual in Finance"). Think about it. [Finance is often one of the last areas](https://www.financedigest.com/4-areas-of-finance-you-should-be-watching.html "4 Areas of Finance You Should Be Watching") of an organisation to be automated, despite enabling technology having been around for a good 30 years now. Still, today, individuals _on the payroll_ are spending their [time manually inputting data from an invoice into their accounts](https://www.financedigest.com/its-time-for-real-time-accountancy.html "It’s time for real time accountancy ") systems. This slow, laborious work is costing companies dearly, while also detracting from those same teams’ ability to scrutinise the data for scope for new efficiencies: for opportunities to curb, consolidate or reallocate spending; to [save money](https://www.financedigest.com/how-to-save-money-for-a-car.html "How to save money for a car"). ### **Beware the ‘back to work’ distraction** Initiatives to lure staff back to the office, in the hope of increasing productivity, are not the answer to [businesses’ woes](https://www.fastcompany.com/90741173/the-gulf-between-workers-and-managers-is-growing-amid-the-return-to-office). If anything, individuals’ new [stress as they return](https://www.financedigest.com/uk-taxpayers-compare-the-stress-of-filing-self-assessment-return-with-undergoing-medical-and-dental-surgery.html "UK taxpayers compare the stress of filing self-assessment return with undergoing medical and dental surgery") to the commute, and have to worry about transport costs, what to wear, what to do for childcare and lunch, could be the trigger to make them leave altogether – wiping out all the benefits of all their training and experience. Now, I firmly believe it’s time to go [back to basics](https://www.financedigest.com/investors-go-back-to-basics-with-simpler-self-driving-vehicles.html "Investors go back to basics with simpler self-driving vehicles"). It’s the only real [option companies have currently for taking back](https://www.financedigest.com/3-options-to-consider-when-you-owe-the-irs-back-taxes.html "3 Options to Consider When You Owe The IRS Back Taxes") control, so it would be foolish not to! --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---