We’re currently experiencing a veritable shopping list of these headwinds – inflation, interest rates, labour costs, fuel prices, and supply chain challenges – applying pressure on businesses across all industries.

For many CFOs, this may be the first time they’ve been tasked with leading their business through the type of challenges that, when occurring in tandem, can threaten not only profitability but business survival.

While CFOs can’t control the entirety of the company’s cost structure – or the issues that impact them – they can have greater control of the situation than they might think. Taking a proactive approach to cost management and removing activities that are a drag on earnings can have a significant impact on returns and contribute to value-creating growth.

The need to balance cost control with sustainable growth is a fine needle to thread, and not all businesses and costs are created equal. With so many cost control levers to pull, where do you begin?

Negotiate terms with suppliers

One of the most effective ways to limit external cost increases is to negotiate (or renegotiate) terms with your suppliers. This may involve discussing payment terms, delivery schedules, minimum order quantities, and other factors that can affect pricing. This is where the time you take to build strong relationships with your suppliers can pay dividends, by securing better pricing and terms to help control costs over the long term.

Update pricing strategy

Pricing is a critical cost control issue for many businesses. Updating your price strategy can help you stay competitive and protect your margins. This may involve re-evaluating your cost structure, analysing market trends, or taking the opportunity to test different pricing models.

Mitigate inflation risks

With all indications being that inflation will continue to rise over the next year, it has the potential to significantly impact your business’ cost structure. It’s important to identify all areas of the business that inflation stands to impact, and the risk this will present for the business. Then, draw up a plan to mitigate them.

This might involve adjusting your pricing strategy, renegotiating contracts, or finding ways to reduce operational costs. It’s also a good idea to continue to monitor inflation trends and adjust your plans as needed to avoid potential disruptions.

Review current processes

Regularly reviewing your business processes can help you identify areas where you may be overspending or wasting resources. By exploring the need for, and ROI of, certain expenditure you may be able to find ways to cut costs and improve operational efficiency.