3.    Turn your accounts payables in to a miniature profit center for your business

There’s money to be made from smart handling of your accounts payables with certain vendors.

"What a lot of people don’t realize is that there are services out there that not only expedite the auto-billing process, but can also secure additional savings for simply paying invoicing with a merchant card ,” McElfresh said. Discuss potential incentives with your vendors, like early payment which may yield savings each billing cycle along with fees collected with a merchant card.  

4.    Review your non-medical insurance policies and ensure that you’re getting the best rate.

From workers’ compensation to property and casualty to liability, small business owners pay a fortune in insuring their businesses from hazardous situations. But it’s important to remember that insurance providers are also trying to turn a profit and won’t offer you the best possible rate for your needs without prompting.

"The non-medical insurance industry still works at 40 to 60 percent gross margin, and on average, there’s a 15 to 20 percent overpayment by subscribers,” while staying with the same coverage as well as broker,McElfresh said.

5.    Hire a professional third-party cost reduction firm.

Many small business owners are aware of the measures that can be taken to ensure operational cost savings, but simply lack the time and resources to commit to steady self-monitoring, analysis, and renegotiating.

"Hiring a third-party cost reduction firm often solves these issues while paying dividends over time,” McElfresh said. If you’re concerned about the cost of hiring a team of third-party experts, remember to look for a firm that only profits when you profit – i.e. a firm with a fee contingent on securing the savings that you’ve hired them to find. Additionally, look for a firm that can leverage their own considerable buying power in your favor by establishing contracts with vendors at significantly better rate than you’d be able to achieve on your own. It’s a win-win relationship.

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$2,124.80.That’s how much I’ve spent at Starbucks since I started tracking my expenditures two years ago. That works out to over $88 per month. Even that underestimates my consumption, because it excludes purchases at Heine Bros. and Jackson’s Coffee.

That’s a lot of coffee. And a lot of unnecessary spending. I know I spend a lot on coffee, but I never would have guessed it adds up to thousands of dollars. I consider myself a decent money manager. I max out my 401(k). I put aside a little each month for my kids’ college educations. I don’t have (too) many expensive hobbies. But it pains me to think that had I just been a little more frugal – made my own coffee, used coupons, ordered a tall latte instead of a venti – I could have saved maybe half that $2,124.80 and put it to other uses. Maybe a weekend getaway, a rainy day fund, donations to charity. I’m clearly not as smart about my own spending as I thought myself to be. Turns out I burned a pretty big hole in my pocket, and a lot of loose change falls out.

Most of us have a good beat on paying our mortgage, car payments, student loans and other "big” items; but are very much in the dark on the "little” things. Maybe we just don’t think about it.

I am not suggesting that my spending that amount of money at Starbucks was unnecessary or that I shouldn’t have spent that amount of money but rather those loose change purchases add up.

Turns out businesses are in the dark on the "little” things too. And by little, I mean those purchases that may be too small on their own to garner their attention but which collectively add up to significant dollars. Granted, we need people to wash the windows and clean the office, we  need temp labor to get through peak times, we need to advertise to drive demand, we need desks, chairs, computer, whiteboards, post-it-notes, pens, paper and more for our people. All are necessary expenditures. But research shows that business spends a lot more on those items and services than they might realize. A lot more!

Using research from Aberdeen Group on how small and mid-sized business miss out on cost-savings [due to a lack of buying power and expertise] we looked at some common purchasing sectors, and figured out what $130billion means. Even the number is hard to read: $130,000,000,000.00….. so we translated those numbers into slightly more tangible equivalents that will be easier to relate to. The results are staggering:

I could buy nearly 62 billion more cups of coffee – each year! Where would I park my 4 million + new cars? I could purchase a new home every minute of every day throughout the entire year – and still have enough money to buy nearly 100,000  more homes with this amount of cash. If I spent all this money on reams of paper and stacked these reams of paper on top of each other then it would go around the Earth 30 times!

All of which begs the questions:

1. Can businesses do anything to change the amount that they spend on these types of expenditures?
2. Is it even worth the effort?

The answer to both is a resounding "YES!” and I’ll explain how in the next post in this series.

But first, I need your help. If you’re reading this now, and it’s got you thinking about how your organization might be over spending on the little things, share an example in the comments section on this post, or follow @AllianceCost and share it via twitter with a #Alliancecost hashtag. We will send you an OfficeMax Retail Connect card (a card that gives you noticeable discounts on office supplies and print services) to everyone who plays along, and then I will use those examples as the foundation for the next post.

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