Today, I spoke with my colleague about whether it is cheaper to do a wire transfer or receive a cheque. My colleageue argued that receiving a cheque is cheaper because it only needs to be printed out which costs pennies while a wire transfer comes with a $10 - $20 fee. However, I disagreed.
I felt that a wire transfer is cheaper for the company because it is seemless. No one needs to print it out, pay for stamps, wait a few days and then deposit the cheque. Sure the perceived cost might be small to mail a cheque, but the extra time this process takes costs the company a lot of money since employee salaries are very expensive!
Later in the day, someone called a meeting where we talked about deciding what to do with 200 pieces of a $0.30 per piece item. This $60’s worth of inventory taking the 6 of us a good 30 minutes to discuss because there were much complications with the disposition. This did not make sense at all but of course someone told us we cannot just keep it because we were trying to keep inventory down to save money for the company. At the end, we probably spent $150 of company money in order to save $60 max. Great.
Some people might be laughing by now, but these types of things happen to many of us. We often try to save extra pennies while spending dollars. I used to keep so little money in my checking account because I wanted maximum interest in other accounts. One day, I accidentally overdrafted my account, which basically negated all the extra savings I got and more.
Do you always look at the cost at face value or do you try to think of the implicated cost? If you are the type that only look at cost on the surface, try to dive deeper from now on!
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{ 6 comments… read them below or add one }
I think I frequently drive 10 miles out of the way sometimes to save a few extra cents per gallon of gasoline.
It’s the principle I think..
I did that yesterday just to try finding the cheapest car wash place ($1.50 vs $1.00) so I know what you are talking about!
100 % true. It happens many time. And what did you do?? a cheque or a wire transfer???
I usually keep several thousand extra in my account to cover overdrafts.
the 4% i get in savings isn’t worth being charged $35 per overdraft.
I’ve sure been guilty of that.
payday: We ended up doing wire transfer since our customer wanted to do it that way.
Adventures: Isn’t a few thousand dollars a little too much? Wouldn’t something like $1k or $1.5k be enough?