Home Commercial & Retail How to Prevent Overspending In Your Real Estate Business

How to Prevent Overspending In Your Real Estate Business

SHARE

The larger a real estate business becomes, the more likely it is that its running expenses become more than they should.  When a company becomes successful, there is a danger that a culture of ‘oh well, we can afford it’, sets in.  Whereas the head of a start-up might be scrutinising every penny, when the company gets to the scale-up stage saving money on expenses can seem less important.  It’s not. If anything, the bigger the company, the greater the savings that can be made.  Once upon a time there was a certain machismo attached to conspicuous waste, it signified strength and prosperity, that is no longer the case.  Any company that is not concerned to promote its green credentials is seriously out of touch, particularly companies in the real estate industry, where income may well vary depending on the amount left in the money pot after sales and expenditure.

Serious overspending

Serious overspending is the result of financial mismanagement. Holding too much stock, overlong payment terms which result in bad debt (the average late payment figure for SMEs is around £80,000) and over expansion.  The chief weapon with which to ward off these ills is a detailed and regularly reviewed budget.  A good budget controls expenses, enables you to identify problems before they become catastrophes and helps you make informed financial decisions. For larger real estate companies, a review of budget should be within a meeting, where all members who deal financially with the business attend.

Negotiate

When the pressure is on and deadlines are tight there’s always a temptation to go with what’s presented because it’s the easiest and the quickest.  There is always a better deal to be had and since your company may be locked into this contract for a set period it makes sense to get the best deal first.  This applies to everything, no matter how trivial it may seem.  It all adds up and the bigger the company, the more it adds up to.

Don’t waste energy

It’s estimated that the UK wastes £170 million a year by leaving lights on.  Any business has a public responsibility to ensure that it is as environmentally friendly as it can be, but a public-facing real estate business particularly.  It’s good for the planet, it’s good PR and it’s good for the bottom line.  All new equipment purchased should be chosen based on its low energy consumption and employees should be educated in energy saving behaviours.  A photocopier left on all night uses enough electricity to run off 1,500 print copies.  Encourage staff to unplug electrical devices when not in use, on desk plug sockets make it easier to avoid unplugging the wrong device.  We are still locked into a tradition of paper copies for everything.  Whilst even a 21st Century real estate business may be unable to go paperless, it is certainly easier to use less paper, as many documents are now digitalised.

Employee expenses

Employee expenses have, traditionally, been time consuming to process and difficult to track.  Company credit cards have encouraged a culture of overspending.  Prepaid cards are loaded with a set budget, appropriate to the role of the member of staff.  Employers can then track employee spending, in real time, via an app or desktop software.  Budgets can be adjusted, limits imposed under specific headings or cards can be frozen instantly, without the need to freeze an entire account.  Data is recorded by employees on their phones and the app links directly to your cloud-based accounting system.

LEAVE A REPLY

Please enter your comment!
Please enter your name here