Debt management is key to a business’s long-term success as well as its ability to keep up with its bills in the short term. If your business is having trouble in this area, consider the following tips.
Organize Your Business’s Affairs
As a first step, the National Foundation for Credit Counseling recommends getting organized. That means thoroughly listing all of the sources of your business’s debt, each one’s remaining balance, and how much the monthly payment of each is. Other important information includes interest rates, due dates, payment methods, each debt’s purpose, and the form each source of debt takes (such as personal credit cards, loans, and so on).
Examine Where to Scale Back
Having the big picture in front of you will help you identify areas in which you may be able to cut expenses—or at least avoid spending increases in the future. For instance, if you notice that you’ve been putting a lot of charges on a high-interest business credit card, that will be a signal that you should reel back on using that source of credit.
Examine Where to Ramp Up
The big-picture view can also assist you in identifying the debt that you want to devote extra payments toward paying down. For example, allocating all of the extra money you can toward paying down the account with the highest interest rate can save you money over the long term.
Talk to Your Lenders and Creditors
While it’s always preferable to pay on time, if your business is having trouble keeping up with its payments, try reaching out to your lenders and creditors to explain the situation. You might be able to lower your monthly payments in exchange for a longer repayment window, for instance. Rather than taking punitive measures, many lenders would prefer to work with their borrowers to come up with an alternative payment plan.
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