Red tape is typically associated with governmental regulations and bureaucratic organisations. But are your own rules and procedures creating unnecessary costs for your small enterprise?
Complying with regulatory guidelines and legislation can be a significant consideration for company managers. For instance, you need to ensure your small business accounting procedures are in line with industry standards and relevant laws. However, red tape isn't exclusively in the domain of governmental bodies: A recent report by Deloitte demonstrated that self-inflicted restrictions are creating expensive drains on businesses.
Focusing on Australia, the report revealed that companies spend about AU$95 billion on public sector rules and an astounding AU$155 billion on self-imposed restrictions. These costs include productivity factors such as spending excessive time on emails related to regulations.
Other ways that regulations can restrict productivity and cost money are centered on processes that are aimed toward improving safety and security, for instance, but aren't designed in the most efficient manner. Deloitte offered several examples, including:
- Processes for procuring equipment parts that caused engineers to walk up to 15 kilometres a day, rather than ordering pieces in advance
- Too many milestones within approval processes, which delayed projects
- Unmanageable password policies that frustrated employees and reduced productivity
If your business is looking for ways to improve its cash flow, examining your policies and procedures might be a great way to start. Often, it's not about avoiding important regulations or safety precautions - you simply need to make sure the process you use is designed to support efficiency.
Leveraging technology can help in this regard, as well, making it easier to verify compliance with rules and regulations.
CashManager by Accomplish provides resources for maintaining GST compliance, which can sometimes be a burden for SME owners. The accounting program is also a great way to have a better sense of your finances, expenditures and income so you can assess whether altering your processes has an impact on your revenue.