4 Ways to Slash Overhead Costs in the New Normal

Overhead costs are a major part of any company’s budget, and finance teams have to be able to identify cost-saving opportunities. They’re well-positioned to spot areas where spending can be reduced when it comes to rent, utilities, office supplies, and equipment. By focusing on the most practical, but often overlooked adjustments, the finance pros play an important part in lowering overhead costs and improving business efficiency.

Cutting Overhead Costs

Here are four tips that can help businesses better manage overhead costs:

1. Reassess Your Space

The gradual shift toward hybrid and remote work options has inspired many businesses to take another look at their office space needs. Deloitte’s 2024 Commercial Real Estate Outlook highlights that 40% of executives across North America, Europe, and Asia-Pacific predict a decrease in occupancy rates over the next 12 to 18 months due to hybrid work models that are helping companies improve productivity and boost profits.

As many companies adopt new working arrangements, one common question comes up. Does the company still need the same amount of office space it did in the past?

Finance teams should evaluate whether their current layout is still necessary, as the company may be paying too much for space when a smaller and more affordable location would suffice. If fewer employees are working on-site at a time, it might be reasonable to downsize the office space or explore alternative options like co-working spaces. 

Additionally, companies can consider subleasing unused office areas. Small changes like these can lead to significant savings over time.

2. Clear Out Unused Storage

Plenty of businesses also have storage space filled with outdated equipment, old products, or poorly sorted hardcopy files. Clearing out these areas is an effective way to save both money and space – and lower overhead costs substantially. 

Encouraging employees to declutter office spaces by disposing of old equipment and supplies can make a big difference. Items that are no longer needed can be sold or recycled, and outdated tech that still functions might do well when donated to startups or nonprofits. This process can also help businesses assess whether their office space is being used efficiently or if further downsizing is possible.

3. Reevaluate Phone and Internet Services

Traditional phone services are becoming less necessary, thanks to the rise of digital communication tools. Today’s businesses are switching to more cost-effective options like VOIP. This report states that unified communications platforms such as VOIP continue to enhance cost savings and efficiency for businesses.

Additionally, finance teams should occasionally review their internet services and ensure that they’re not paying for unused features or redundant services. Bundling services or opting for cheaper plans can help reduce monthly service costs. Purchasing business routers instead of renting them from service providers can also help cut unnecessary fees.

4. Encourage Paperless Practices Across the Board

Going paperless has become more important than ever in the past couple of years. Not only does it contribute to sustainability efforts, but it can also help with cost control. Forbes notes that reducing paper-based processes not only enhances efficiency but also generates substantial overhead costs savings by reducing printing, storage, and supply costs.

Finance teams can lead the way in this endeavor by implementing policies to minimize unnecessary printing and urging employees to only print essential documents. Consider break rooms and bathrooms as well. Switching to reusable cups and other eco-friendly alternatives can further lessen paper consumption.

By following these tips, finance teams can help businesses lower overhead costs and contribute to improved profitability. With the right approach, companies can adjust to new work environments and streamline business operations without hurting their bottom line.