Rising electricity tariffs: SA companies likely to reduce operational expenses
NUS Consulting's Energy Market Survey highlighted the difference between South Africa's energy prices and the energy prices in international markets. The report revealed that the country is riding the middle wave of the survey participants (18 countries) for gas and electricity prices.
Between 2014 and 2015, the power prices surged 8.2 percent, standing at 8.46 cents (US) per kWh (kilo-Watt hour), the second biggest increase, behind the 9.9 percent increase in Belgium. The NUS warned that this is probably the last single-digit increase for the nation, as a 12.69 percent surge in prices was expected in the upcoming year, with more price rises to follow.
The rising electricity tariffs mean an increase in fixed costs for South African businesses and start-ups. These firms rely on electricity to power up their computers and servers, so electricity is something that is more of a necessity than an option. As a result, these firms should work to reduce operational expenses in other areas of the business in an attempt to keep costs low.
Here are some tips for African firms to bring down operational expenses:
1. Streamline wage payments
If you're managing wage payments through manual processes, minor errors could result in significant financial losses. For instance, the wrong entries could result in overpayments, or delayed payments, resulting in inefficiencies. Errors could also result in liabilities that put your company at risk.
To reduce such inefficiencies resulting from clunky processes and dated systems, businesses can leverage options such as ADP business payment solutions. Advanced payment modules will help you cut operating expenses - as well as improve regulatory compliance while protecting against fraud - with paperless distribution and payroll processing. With an automated process in place, you will have the flexibility to pay employees the way they want, as well as scale up the speed of payments.
2. Reduce packaging and freight costs
With electronic and mobile commerce in South Africa on the rise, there has been a rise in demand for packaging and logistics. If you're operating in this sector, you can analyse the competitive landscape for savings. For instance, ensure you're utilising full truckloads on outbound shipments. You can also see if there's a possibility to recover the uplift shipping expenses from customers.
Then businesses can also tap into reverse logistics, which provides a hidden opportunity for cost savings and turning returned goods into a profit. Did you know there's a big secondary market out there for returned items? That's how Amazon and other eCommerce giants thrive - by listing returned items in secondary markets for sale, sometimes at a full price and sometimes at a reduced price. An example is refurbished iPhone going on sale.
3. Reduce outsourcing expenses
Many businesses these days outsource parts of their operations, such as IT and marketing. But there are times when you can't just hire remote employees. Agencies can be expensive, so businesses are recommended to use "temps" for the jobs.
This can be done by hiring interns for business roles. Call the business trade school or local office in your city to recruit the right individuals. College students work for small fees, and sometimes no fees (especially when they're securing school credit). Another option is to hire a temporary virtual assistant to do remote work.
About Boris Dzhingarov
Boris Dzhingarov graduated UNWE with a major in marketing. He is the CEO of ESBO ltd brand mentioning agency. He writes for several online sites such as Tech.co, Semrush.com, Tweakyourbiz.com, Socialnomics.net. Boris is the founder of MonetaryLibrary.com and cryptoext.com.
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