Three Surprising Places to Plug Cash Leaks
You might not even notice, but unassuming expenses are eating into your hard-earned profits. They can go unnoticed for months (maybe years), until you need to tighten your belt. Then business owners react by delaying investment, stopping marketing, or cutting staff, which hurts growth.
What if you could improve business cash flow and profitability without making drastic cuts?
Before you make decisions that could slow your business down, look for where you are wasting money without realising it. In these instances, you will find that the pennies really do make the pounds!
We know the challenges entrepreneurs face because we’re entrepreneurs too. And when we look at business bank statements, we see the same avoidable spending again and again.
1. Subscriptions and Software You Have Stopped Using
Software is easy to buy and surprisingly easy to forget.
You may be paying for unnecessary licences, users, or seats on a programme after employees have left the organisation. Simply blocking a departed employee from signing in doesn’t stop billing. You must remove their license.
Similarly, you can look at downgrading other platforms and packages because your volume has decreased. For example, HubSpot or Mailchimp tier their pricing based on the number of contacts. Clean your database regularly to avoid paying for former contacts.
You might have signed up to a platform for a hyper-specific, one-time, purpose or taken out a monthly subscription during a busy period. In the busyness of business, you’ve moved on, not realising you’re still being billed.
One £30 or £50 monthly charge is easy to overlook. Ten of them can represent hundreds of pounds a month.
Cost Reduction Strategies
Run a six-month review of every recurring payment leaving your business.
For each subscription, ask:
- Who uses it?
- How often is it used?
- Do you need the current plan?
- Are you paying for duplicate functionality elsewhere?
- Could you move to an annual plan or a cheaper tier?
Do not automatically cancel anything that looks non-essential. The objective is to cut unnecessary business expenses without cutting something that genuinely helps you sell, operate or grow.
A Gold Nugget
The smartest thing you can do during your review process is see where you can consolidate services. Digital products change all the time. You might find that Microsoft 365 has introduced a feature you were paying for elsewhere.
Say, for example, storage and file sharing on Dropbox. Your MS365 subscription includes a good terabyte of storage, and sharing large files is now easier than ever.
Likewise, if you’re paying for Adobe Acrobat, you might find its sign-and-send feature eliminates the need for DocuSign or PandaDoc.
2. Insurance That Has Never Been Properly Reviewed
Insurance is another area where businesses can end up paying for yesterday’s circumstances.
Your turnover may have changed. You may have fewer vehicles, different equipment, new premises, or a different mix of customers. Yet your policies may still reflect the business you were running several years ago. Assets also depreciate over time.
That can mean paying for cover you no longer need. Conversely, you could be paying a premium without the right level of protection.
Curb Business Overspend
Review your insurance at least once a year, and whenever your business changes significantly.
Do not just compare the premium. Check what you are actually covered for, whether limits are still appropriate and whether you have overlapping policies.
For example, a growing London butcher may have changed its stock levels, equipment, or delivery arrangements since its last renewal. Those changes should be reflected in its cover.
A proper review can identify overpayment, but it can also prevent a cheaper policy from creating an expensive gap in protection.
3. The Small Charges Hiding in Your Payment & Collection Processes
Stop letting hidden fees and clunky processes drain your revenue. Bank charges and payment costs are easy to dismiss because they rarely arrive as one large bill.
Instead, you might be paying transaction fees, monthly account charges, card processing costs, foreign exchange fees, or charges for services you rarely use.
Then there are the costs created by inefficient payment terms.
If you are giving customers 60 days to pay while your suppliers want payment in 30, you are effectively financing the gap yourself.
Taking control of how you get paid can protect your margins.
Don’t Get Penalised for Making Money
Audit your merchant statements to eliminate unnecessary processing fees.
- Call your provider to discuss switching to a pricing plan that better fits your current business model.
- Scan your bills for avoidable fees. A PCI non-compliance fee usually means you haven’t completed your annual security questionnaire, so finish it and the fee should stop. Ask your provider to remove other extras, like paper statement charges. Whenever possible, steer your customers toward debit cards or Direct Debit bank transfers to bypass expensive credit card rates.
Overhaul your collections to keep your cash flowing smoothly.
- Stop chasing late payments manually; instead, automate your invoicing workflow with software that sends recurring bills and instant reminders.
- For long-term clients, mandate BACS or Direct Debit mandates so you pull funds directly from their accounts on time.
- You can also offer a small early-payment discount (like 1% to 2% off if settled within 10 days) to incentivise fast action and avoid collection headaches.
If you need cash now, but it is tied up in outstanding invoices, consider Funding Alternative’s Selective Invoice Finance. It provides funding against selected invoices (not the entire sales ledger), realising up to 80% of their value immediately.
Shield your business from fraud and expensive chargebacks.
- If you sell in person, ensure you use fully upgraded Chip and PIN or contactless terminals to shift counterfeit card liability away from your business.
- For online sales, activate strict 3D Secure (3DS) authentication alongside CVV checks to block scammers before they hit your bottom line.
- Update your billing descriptor so your exact trading name appears on customer bank statements, preventing accidental, frustrated chargebacks.
By shifting from passive acceptance to active management, you optimise every pound that moves through your business.
What Should You Do With the Money You Save?
This is where plugging cash leaks becomes more than a cost-cutting exercise.
If you identify £500 a month in unnecessary spending, that is £6,000 a year that can be put to better use.
You could use it to build a cash buffer, buy stock, invest in marketing, or replace essential equipment. Better yet, you can reduce the amount you need to borrow.
Funding is useful when you have a genuine opportunity. It can be counterproductive when you borrow simply to cover costs you could have removed.
If you do need additional working capital after tightening your finances, Funding Alternative can help you consider options such as a Business Cash Advance or Merchant Cash Advance, depending on how your business operates and what you are trying to achieve.
Plug Before It Pours
You do not always need drastic cuts to improve profitability. These simple steps can make a significant impact.
Start with the costs that have become invisible because they happen automatically: unused subscriptions, poorly reviewed insurance, and payment arrangements that quietly drain cash.
You don’t need to sacrifice loads of precious time, either. One afternoon once a quarter should be ample. Go through the statements and challenge anything you cannot clearly justify.
Once you plug those leaks, we can help you use funding for what moves your business forward, not to fill avoidable gaps.
Ready for your next stage of growth? Get in touch and let’s make a plan. Email [email protected], call 0800 102 6000 or apply online.
