How to reduce or cut your company's administrative expenses?

Finance / Date: 04-06-2025

In this article, you will learn how to recognize administrative expenses that can be reduced or cut and discover how to make adjustments efficiently. Check it out!

What are administrative expenses?

To learn how to reduce or cut your company's administrative expenses, you first need to know how to identify them. So it's worth reviewing this concept and then learning about the most common types of expenses in a business.

Administrative expenses are all business expenses not related to the organization's main activity. In other words, they are not directly linked to the products or services offered to customers.

These expenses might be classified as either variable or fixed. One example of a fixed expense is rent, which has little to no fluctuation in cost. As a result, they are more difficult to reduce or eliminate from your company.

Expenses that change in value more frequently are known as variable expenses. For instance, this is true with electricity. It is easier to cut this kind of expense by implementing effective procedures, which enables larger savings.

What are the main administrative expenses of a company?

To better understand what administrative expenses are, it is worth looking at examples of this type of expense. In the case of smaller businesses, the main ones tend to be:

consultancies;
cleaning material;
insurance and benefits;
depreciation in general;
office supplies;
attorney's fees;
employee training;
rental of commercial space or property;
pro-labore or remuneration of partners;
hiring and firing employees;
payroll of administrative staff;
consumption bills — water, electricity, for example;

What can be done to reduce administrative expenses?

Now that you understand the concept of administrative expenses and have seen some examples, it is time to learn what to do to reduce or cut this type of expense. The first step is to develop a strategic plan to contain expenses with the administrative and financial departments.

This tool allows managers or entrepreneurs to set savings goals and easily identify waste and opportunities to save. This makes it possible to make informed decisions, avoiding compromising the quality of employees' work or even the product or service offered.

To do this, you need to establish the amount you want to save. Next, it is important to list all of your company's administrative expenses and classify them as fixed or variable. This way, you can have a broader view of where to start reducing or cutting expenses.

How to reduce your company's administrative expenses in practice?

After putting together your plan with actions to strategically reduce or cut your company's administrative expenses, you need to know how to make the savings, right?

So, follow these practical tips to reduce administrative expenses in your business and increase your chances of making bigger profits!

Tax burden

Taxes represent a large part of companies' budgets. Therefore, finding ways to reduce them can allow for significant savings. In this sense, there are several legal measures to reduce the tax burden on your business.

One way is to adjust the legal framework so that the tax to be paid can be reduced. To do this, it is worth having the support of an accountant to find the ideal tax regime. Another solution is to be aware of tax benefits that offer tax discounts.

Payroll

Payroll is another administrative expense that has a big impact on a company's bottom line. Therefore, it makes sense to take this expense into account as well. One strategy to reduce the amount of overtime paid is to create a time bank.

This is because overtime pay is higher than normal working hours. Therefore, by replacing this expense with time off or vacation, you can make significant savings. You can also set limits on how many hours you work overtime to control this expense.

Hiring and firing

High employee turnover can be costly for companies. After all, both hiring and firing involve expenses that can impact the budget.

To reduce these expenses, it is necessary to improve the hiring process. By identifying people who share the same values as the organization, for example, you increase the chances of the new employee staying longer at the company, reducing hiring and firing costs.

Consumption accounts

Small utility bills, when added together, can affect your business finances . For this reason, don’t underestimate them. It’s worth thinking about ways to reduce them and even cut them, if possible.

For example, you can save on your electricity, water, telephone and internet bills by changing some habits or reducing the package you have contracted.

In the case of energy, you can encourage the conscious use of this resource and replace outdated appliances and equipment with more energy-efficient ones. In relation to the telephone, it is worth renegotiating the contract with the operator to reduce the cost of the plan, if it makes sense for the business.

Bank fees

Another administrative expense that you can reduce or cut is bank fees. To do this, you first need to understand your business needs and then analyze whether your banking package meets your interests.

Otherwise, you can contact the manager to negotiate a reduction in the fees charged. Another solution that may be more advantageous is to migrate from traditional banks to digital banks . They usually offer free services, which can meet the needs of the business.

Now you know how to reduce or cut your company's administrative expenses using simple measures — saving money and increasing profits over time. However, remember to plan ahead to identify strategies that can bring results to your business without harming the company's future!