There is a way to get control of your business debt. It does not always mean you have to close your doors or file for bankruptcy. You cannot run from debt, and it will never go away on its own. Begin with these simple steps to assess the amount of debt and then move into more complex methods to get your business on the right path.
Assess and rework your budget
The first step is to understand your financial situation. Create or revisit your budget to learn where your money is coming from and where it is going. Then, reexamine and revise your budget as needed, typically every month. Most importantly, stick to it! This will help your business stay in the black and to succeed and grow.
Common sense says less expense means higher income. Take the time to find out what you can live without and eliminate unnecessary costs to improve the bottom line. Figure out which services and expenses are absolutely necessary to the business, and cut the rest. Cutting these expenses can help your business improve cash flow and become more profitable.
Temporarily pay with cash (if you can)
Paying with cash makes a business owner more aware of expenses and can readily ascertain if the expense is necessary or can be delayed or omitted completely. Lines of credit and credit cards only increase your business debt. *Tip: assign a specific amount of spending cash each month, in line with your budget, instead of putting expenses on a business credit card or line of credit. This will help avoid adding to your debt and only allow you to purchase what you can afford.
Communicate with creditors and lenders
One of the most detrimental things you can do to your business is to run and hide from your debt. Keeping lenders and creditors informed helps build strong relationships and credibility. Strong, long-term relationships may help you negotiate lower interest rates with your creditors and discuss other options with your lenders.
Create a “target debt” or “stack” repayment plan
Floundering with no repayment plan is calling for larger issues and more debt in the long run. Tackle it now with this method. Begin by creating a list of all your business’s sources of debt, listing the ones with the highest interest rates first. Targeting high-interest rate debt first will help you save money in the long run. Then, make the minimum payments for each listed, and when you find extra money in the bank, you put it towards the debt at the top of the list.
Increase your income
A business owner should always be seeking more and better ways to increase income while reducing expenses. Exploring untapped markets and reaching out to potential and new customers can help diversify your customer base. And don’t forget to follow up on any money owed from overdue payments from customers.
Call American Finasco
Every small business will face hard times. With help from American Finasco and willingness to weather the storm, you can make it through these tough financial times. American Finasco has several options to reduce your commercial debt which allows you to stay focused on your business. We provide strategies and take the pressure off business owners who are having a hard time managing their debt. The first step when dealing with creditors is a phone call to American Finasco. We provide our clients with effective solutions for business debt relief. Visit Contact Us and complete our Online Form for a free consultation or call (800) 299-2909. We look forward to speaking with you.