On average, most people overpay up to 18% when it comes to their business expenses. This excess payment mostly goes to vendors and external services. That number is massive for any company, whether large or small, but it is incredibly huge if your company is a startup.
The worst part about these expenditures is that they do not show up as discrepancies or errors when your accountant is going through the books because this problem stems from poor expense management.
Related Post: Does Your Startup company Need an Audit
This is why expense audits have become a necessary service to stop startups from wasting their initial capital. An expense audit will bring to light the places you have been overpaying and create a path to new opportunities for savings.
If you have any roadblocks in your business due to a lack of capital, then an expense consultant can tell you where you can find more money in your own business. Here are some tips that can help you choose your company’s right expense audit program.
Check the Prices
While checking the price of hiring an expense audit program is the first thing you would do, there is more to this than meets the eye. Reputable and reliable expense auditors tend to work on a contingency basis. This means that they will not charge you for their services unless they help you save a significant amount.
Some of these audit programs even guarantee a set percentage of savings if you were to avail of their services. If they have the necessary expertise and knowledge of the market, their fees might be on the higher side, but it’s a small investment leading to significant cost reduction.
Many audit programs specialize in a set type of business. On the other side of the spectrum, some specialize in a vast category of businesses. Check with the expense auditor if your company falls under their expertise.
When an expense auditor is well-versed with your business, they can better guide you and advise on your expenses. However, some businesses do not fall under any established category. In this case, you can ask the expense auditor about the specific parts of your business where they can provide their knowledge and services.
Ask For References
If the expense audit program you are considering is reliable, they will have excellent references to back up their claims. Most reviews can be found online, either on the company’s website or on third-party review forums. Remember, a company with good references will always display them on their home website.
The best-case scenario will be if the company provides you the references directly. This shows that they are confident in their capabilities and have provided appreciable services to their past clients. These references can help you understand the position and reputation of the expense audit program in the market.
Look At Case Studies
References are only part of looking into the auditor’s past services. Another way is to check for case studies. If an audit program is well-established, it will provide you with case studies of previous clients without asking. This is because a case study will give you more of an in-depth view of the company than references can.
By examining their case studies, you can see exactly how much money the auditors have saved for their previous clients. You can also see how they oriented their strategies to fit different types of businesses better. This will assure you of their expertise.
Most of the overpaying when it comes to businesses is the result of strained relationships with vendors. This is because vendors tend to share their rates with companies, which are often arbitrary.
Most startups tend to go with the cheapest option instead of analyzing the average market rate for types of vendors. Don’t be surprised if the auditor’s first piece of advice is to change your vendors entirely. Reliable expense audit programs tend to have a good knowledge of the market rate of vendors in general.
Furthermore, they also have good relations with vendors, which means that if you don’t want to change the vendors, they can negotiate with your existing vendors for lower prices.
It is imperative to save every penny possible when it comes to startups because you only have so much capital to waste. An expense audit will not help you make money, but it will help you save a lot.
Cutting down on your expenses will be a perpetual task, but once an expense auditor looks at your books, they can give you useful tips that will help you save money long after they have provided their services.