August 31, 2017
Many businesses incur debt during their operations when they use bank loans and credit cards. However, unsustainable debt without capital or increasing income that can cover it places the survival and well-being of your business at risk.
Although some business models are compelled to incur debt to access opportunities for growth, debt can diminish the excitement of entrepreneurship. Debt settlement along with other management strategies can help you lower debt and get your business back on the right path.
Evaluating Business Debt
When you are in debt, you need to evaluate how deep the problem is and the tools that are available to help you come up with a practical plan before you find a way out. Ignoring debt does not make it disappear and you may be pleasantly surprised to discover that overwhelming debt can be eliminated by simply becoming more organized while optimizing income to pay it off faster.
- Calculate your debt, make a budget and figure out the amount of cash that you will allocate to debt payments.
- Create a spending plan that focuses on essentials until you reach your goal. Set goals for specific income streams that can help you pay off debt.
- Consider dedicating a percentage of profits to extra debt. Such techniques are useful for paying down business debt when you stick to your budget and cash flow is relatively consistent.
Debt Settlement- Negotiating Payment Terms
- When you have clear insight into the total debt you owe, you need to identify ways to deal with debt effectively and reduce what you owe. Knowing the terms of loans enables you to pay them off more strategically. Negotiating these terms is applicable to the original loan and there is a chance that the lender is flexible enough to accommodate changes in payments.
- Making payments on time is ideal but if you are facing financial hardship, do not hesitate to reach out to creditors and negotiate loan terms. If you owe a significant amount in unsecured debt that you are unable to pay due to financial challenges, debt settlement is one of the debt options that can work for you.
- Debt settlement is ideal for people who have savings that can cover lump sum payments of a percentage of total debt owed. It can also be considered when you are able to save the required amount within a reasonable amount of time. Depending on the settlement agreement, being able to commit to monthly payments may also make you eligible for business debt settlement.
After identifying and reducing your debt and setting up a favorable repayment plan, you can work toward getting rid of the debt by using cash that is available. Do not allow debt to stand in the way of your entrepreneurship. Generating more cash means that you will be able to lower your business debt more quickly and pay down loans. There are different ways to increase your business monthly income.
Consider diversifying by adding another service or product to what you currently offer. You can also diversify by changing your marketing strategies and attracting other customers that you may have not thought about before.
If you can maintain a similar volume of sales, raising your prices is a fast way to increase revenue. Before you start charging more for services and products, let your customers know that prices are set to rise and they can make purchases before the changes are implemented. This can also help to boost income.
Find ways to increase sales within your existing customer base. You can offer incentives that will entice customers and encourage them to make more purchases. Limited offers, sales and discounts are some of the ways to increase monthly income.
If you have unsold goods that are interfering with cash flow, you need to change the way you purchase items and optimize the turnover of inventory. Work out arrangements with suppliers to accepts goods when they are not sold within a period of time. Liquidating assets enables you to sell surplus items that you do not use to people who need them. From desks to technical equipment, there are different things that you can dispose of.
Debt settlement or negotiation allows business owners to negotiate with creditors with the aim of accepting less than the entire amount of debt you owe them to fully satisfy the debt. Debt settlement programs can help you get rid of debt quicker at a reduced cost and prevent bankruptcy. Enrolling in the program enables you to become debt-free without resorting to bankruptcy. Relief from debt ensures that you financial situation will no longer hold you back and the financial wellbeing of your business will be restored.
Trudy Seeger is a debt consultant. He consulted for Creditors Relief among other debt relief organizations. He has more than five years’ experience in the financial industry.