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September 15, 2017 | Posted in:

Review Recurring Subscriptions Fees to Improve Your Bottom Line

Auditing your auto renewing subscriptions is often an overlooked method of reducing a monthly or annual business expense.

 

On the surface they seem harmless – a small monthly trade magazine subscription or a quarterly software fee – but with a number of employees making these purchases, over time the expenses can really add up. And because of their relatively low cost and regular appearance on credit card or bank statements, they are less likely to be noticed.

Associate Partner Ren Cicalese III, CPA, MST has seen a recent example:  “A client recently discovered that their automatic payments for the corporate accounting software was higher than normal. After a careful analysis, the client determined that the software company had been overcharging the client for the last seven months. Revisiting automatic payments for accuracy can save you both money and time in the long run.”

So how can one ″audit″ subscription and membership expenses?

 

5 Tips to Managing Business Subscription Expenses

 

1. Isolate the Charges. First, isolate all subscriptions, dues, and fees into one account on your general ledger. Collecting all these expenses into a single account will make it much easier to identify waste than if they are lumped into a general category like ″office supplies″.

 

2. Expense Justification. Ask employees who initiate these charges to justify them annually. Consider issuing individual company credit cards to your employees for small purchases, including subscriptions. Not only will this help identify the source of a charge, it will leave the decision of whether or not to cancel on the person most familiar with the expense.

 

3. Watch Automatic Payments. You may want to eliminate subscriptions paid automatically. Even though such arrangements are convenient, these charges are more apt to continue without question, especially those pesky once-a-year fees that show up without prior notice.

For more advice on keeping a watchful eye on automated payments, read our recent article on ‘Zombie’ payments →

 

4. Potential Risk. Subscriptions for technology and file storage are more difficult to assess, but carry a higher risk. For example, it can be convenient and relatively inexpensive for an employee to set up online storage of their electronic files. In addition to adding up over time, these subscriptions can pose a security risk when critical company data is stored offsite and under the control of one employee.

 

5. Set a Budget. “Create a budget for all of your current subscriptions,” recommends Ren. This will allow you to compare expected amounts paid throughout the year to actual results. By analyzing the differences, you’ll be able to quickly identify if any charges weren’t in line with what you expected.”

 

When it comes to memberships and subscriptions, it all boils down to understanding what you are paying for and how it is being used. Taking the time to audit this expense category can save big dollars down the road.

 

Contact us for tax planning guidance and more information

The information contained in this newsletter is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information or for assistance with any of your tax or business concerns, contact our office at 856.667.4100.

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