All business overhead expenditure need to be budgeted and apoortioned as fairly as possible to various departments of the business. If we have been set a clear budget plan, then we can manage the overhead costs by limiting budget spending and improving overhead productivity. And in the case of over-expenditures occurs, we can track the cause and check it in time.
There are some departments that can be budgeted to reduce the costs, such as the cost of business travelers, electricity costs, office expenses and so on.
Companies need to develop a sound expenses claims system to prevent any possible system abuse and misconduct. The companies should encourage their business travelers to get off tickets.
The cost of electricity is a very important part of overhead, if a company can maintain the low electricity rates, it would be very helpful in reducing overhead costs.
To keep the office costs low, we can start from office supplies. Items such as pens, paper, paper clips, pencil do not cost much individually, but we use them in large numbers, so there is a potential for huge savings. Buying a used office furniture is also an important way to reduce the overhead. But in order to motivate our employees, it must be measure to control their performance regularly.
Meanwhile, long-term effects can be considered. In reducing overhead costs, we should not aim to seek an instant success, we must put our overheads reduction plans in a greater perspective and evaluate the general effects. Reduction measure will enable the company to tap its potential productivity and ensuring its future developments.
We also need to involve our employee into the overhead reduction project and try to see if they have something to contribute to it.