How to Control Business Spending without Sacrificing Growth

Four out of five businesses view cost management as the top priority for profitability, according to Infosys research. Unfortunately, in the quest to control business spending, many companies unintentionally cut the very things that strengthen profitability and growth. In this guide, we’ll walk you through some best practices and tips to eliminate unnecessary spending while keeping your core operations strong.

Understand Where Your Money is Going

When you know exactly where your money flows, you create the ability to direct capital with purpose. Instead of trimming randomly, you can fund the priorities that drive growth and scale while keeping unnecessary costs in check.

Split Small Business Expense Tracking and Check Fixed vs. Variable Costs Monthly

Separate expenses that remain steady from those that shift with activity to see which costs provide stability and which give you flexibility to adjust as demand changes.

Monitor Company Expenses in Real Time

Cash flow and opportunities fluctuate on a day-to-day basis. Use cash flow and budgeting tools to monitor your spending in real time, so you can reallocate funds toward opportunities as they appear and keep your business agile.

Identify Recurring Charges and Unused Subscriptions

The average company has 275 SaaS applications, according to Zylo research. More than half of all SaaS licenses go unused. Perform an audit to identify each recurring charge and find out which ones can be cut or trimmed. This will help you free up immediate cash without putting any unnecessary strain on your team and business.

Develop Smart Spending Strategies, Including Clear Spending Policies and Approval Limits

Once you have visibility into where your money is going, the next step is making sure spending decisions align with your priorities. Clear policies and approval limits create consistency, reduce waste, and empower managers to make smart choices without slowing the business down.

Follow Business Budgeting Best Practices, Create Department-Level Budgets, and Enforce Limits

Budgets give each team a defined runway. When departments know their boundaries, leaders can allocate resources toward the initiatives that matter most while avoiding unplanned overspending. Enforcing limits also helps you compare performance across departments more accurately.

Require Approvals for Non-Essential or High-Ticket Expenses

Not every expense requires a manager’s sign-off, but discretionary or high-value purchases should. This prevents surprise charges from showing up on the books and ensures large investments are aligned with company goals.

Educate Managers on Company-Wide Cost Priorities and Managing Business Cash Flow

Policies only work if your managers understand the bigger picture. When they know which costs drive growth and which are secondary, they can make better calls on what to approve and what to decline. This alignment keeps everyone moving toward the same financial objectives.

Control Cash Flow Through Smarter Vendor Management

Vendors influence your cash flow management as much as your customers do. By strategically managing these relationships, you can improve liquidity, reduce costs, and give your business more room to maneuver when opportunities arise.

Negotiate Better Terms with Suppliers

Many suppliers are open to adjustments if you have a reliable payment history. Extending payables from 30 to 45 days, for example, gives you more time to collect from customers before your bills are due. Even small shifts like this in payment terms can strengthen cash flow.

Consolidate Vendors to Gain Leverage

Spreading purchases across multiple suppliers can dilute your buying power. By consolidating with fewer vendors, you often secure better pricing, stronger support, and more favorable terms. This also simplifies management and reduces administrative costs.

Bear in mind, however, that maintaining relationships with other vendors is crucial for protecting your supply chain. Rather than cutting out other vendors entirely, consider placing occasional orders with them to ensure you can still call on them if your primary vendor falters.  

Use Early Payment Discounts Where Feasible

Some suppliers reward speed with discounts. A two percent discount for paying within ten days can be worth the effort if you have the cash on hand. The key is to weigh the discount against the value of keeping that cash available for other opportunities.

It’s worth noting that if you don’t have sufficient working capital to take advantage of these discounts, invoice factoring may provide a pathway. With this approach, a factoring company like Viva Capital purchases your unpaid B2B invoice at a slight discount.  The discount rate varies based on considerations like your industry and the risk of non-payment, but is typically between one and five percent of the invoice’s value. In other words, factoring can actually result in a net gain for your business when leveraged to secure a discount. Some businesses leverage so they can place larger orders with vendors to secure bulk discounts as well.

Reduce Small Business Expenses without Cutting Cornerstone Operations

Sometimes, businesses worried about cost control begin making cuts across all areas that appear to have bloat on the surface, without evaluating the actual value of those outlays.  Before reducing costs, consider how each expense supports your business operations and contributes to growth. Focus on reducing costs in areas that do not compromise your ability to deliver core products or services. This frees up resources while protecting the foundation of your business.

Reduce Overhead in Business by Outsourcing Non-Core Functions

Functions like payroll, IT support, or customer service overflow can often be handled more efficiently by specialized providers. Outsourcing reduces overhead and allows your internal team to stay focused on the activities that drive revenue.

For instance, nearly two-thirds of businesses spend 14 hours each week chasing invoices, according to Intuit. While you can outsource these processes to a dedicated collections company, you can also have them taken care of through factoring, as the factoring company manages the collections process for all factored invoices.

Switch to Variable-Cost Tools Instead of Fixed Contracts

Long-term, fixed-cost contracts limit flexibility. Cloud-based platforms, pay-as-you-go services, and usage-based pricing models align expenses with actual activity. This allows costs to scale up during peak demand and drop back when things slow, so you aren’t paying for capacity you’re not using.

However, there is one caveat here: it’s essential to do the math before downgrading or changing plans. In many cases, businesses receive a substantial discount for agreeing to a longer contract. If sticking with annual and fixed-cost contracts saves money over alternate models, it’s often worthwhile to lock in the lower rate.

Review Staffing Levels vs. Productivity Regularly

Labor is often one of the largest expenses for businesses, consuming 15 to 30 percent of revenue, per Hourly. The amount varies dramatically by industry. For instance, manufacturing businesses have an average payroll ratio of just 12 percent, while construction companies come in at 20 percent. Meanwhile, landscaping businesses can skyrocket up to 50 percent, particularly as demand and overtime costs increase during busy seasons.

Review output against staffing levels to ensure you are getting the right return on payroll investment. Headcount cuts are not always necessary, even if there is an imbalance, but you may need to consider redistributing workloads, cross-training employees, or investing in tools that boost productivity.

Use Financial Tools to Identify How to Cut Business Costs and Stay Accountable

Financial tools give you a clear record of how spending aligns with your plan, so it’s easier to adjust course and stay disciplined as your business grows.

Implement Monthly Budget vs. Actual Reports

Compare planned budgets against actual spending each month to identify variances quickly. When you see where money consistently overshoots, you can investigate the cause and decide whether to reset the budget or control the expense.

Set Alerts for Overspending Categories

Most accounting and expense platforms let you create thresholds. For example, if travel costs exceed a certain dollar amount, you receive a notification. These guardrails can help you catch problems early and correct them before they affect cash flow.

Review Quarterly Trends with Your Accountant or CFO

Numbers viewed month by month can hide larger patterns. A quarterly review makes it easier to see whether spending is trending up or down in key categories and if your financial ratios are healthy. Partner with an accountant or CFO to get an outside perspective and ensure your financial strategy keeps pace with growth.

Improve Cash Flow and Keep Your Growth on Track with Factoring

Factoring frees you from waiting on customer payments and accelerates cash flow, so you can invest revenue back into your business quickly. It also helps you manage back-office processes like collections and allows you to manage receivables risk better, so you see fewer losses. If you’d like to explore the fit for your business more, request a free funding estimate.