When business expenses are piling up and you’re not sure how to get out from under the increasing mound of debt, don’t panic. There are steps you can take to get your business back on track.
The first thing you need to know is exactly how much debt you have, what type of debt it is and who you’re paying each month. Also look at the terms of your existing loans and work out how long it’s going to take you to pay each of them off at the current rate.
Figuring out the ratio of debt to equity can be helpful in determining the percentage of debt you have in relation to available assets.
Expenses such as employee wages, rent, utilities, taxes and aging invoices have to be paid regardless of current debt. List your most important expenses first to determine the total monthly cost.
Apply anything that’s left over to paying down your debt. If more payments remain, it’s time to look into other forms of funding.
One of the fastest ways to increase cash flow is to sell inventory or equipment that you’re not using. Get in contact with other companies in your industry and see if they could use the supplies that are taking up space.
If you run a retail business, consider offering customers a limited-time discount to boost revenue. The money you get from these sales doesn’t come with the restrictions of a loan and therefore can go directly toward taking care of your debt.
Though it might seem counterintuitive to take out a loan to pay off debt, however sometimes a short-term loan can be the right solution. Alternatives like maxing-out your credit cards saddle you with such high interest rates that minimum monthly payments don’t touch the actual balance. A short-term loan can take care of that interest.
Consolidation, renegotiation and refinancing may all be options depending on the types of debt your business is carrying. For loans, sit down with the lender and explain your situation. See if they’re willing to extend the payment period or restructure the payment schedule to meet your needs.
These institutions would prefer to be paid back rather than suffer loss if a business goes under, so chances are that you’ll be able to work something out to lower your monthly expenses. For credit card debt, you may be able to refinance using a loan structure with smaller payments and less interest.
Debt doesn’t have to spell the end of your business. Doing the math, rearranging priorities and seeking alternative financing options can ease the burden and help you get back on track with regular payments until the debt is gone.
Contact us today to schedule a free consultation with a finance advisor to talk through all of your options for handling your debt starting today.