Steps To Dig Out Of Business Debt
THE HANS INDIA |
Sep 11,2017 , 04:19 PM IST
Debt is inevitable and a necessary part of the business operation, small or big. To finance your business in such situations, you can opt for a business credit card, a business loan or a line of credit. This will enable you to purchase new equipment and machinery, hire new employees for your organization and also keep adequate finance for future business growth and development. But you have to be careful about such debts as too much of it can strangle your business cash flow and jeopardize the mere existence of your business. Moreover, you can invest more if you have less debt and owe less.
Take Accurate Inventory Of Debt
This is an effective way to know the position where you stand and can be done easily by listing down all your debts chronologically according to the rate of interest of each and the monthly payments that you have to make. Such debts must not only include lines of credit, business loans, and business credit cards but also include any outstanding payments that you owe to any vendor. This will enable you to prioritize your debt when you repay them. As per industry experts, you should start with the debts that carry highest rate of interest with it. It is also suggested that if you want to avoid bankruptcy, then you should repay it all within a year of your business.
Boost Your Sales
Now that you have a debt management plan ready, you should focus on boosting up your sales to increase the cash flow and make arrangements to repay your debts. One of the few best ways to do so is to reward the loyal customers of your business. Such loyalty program will increase the level of customer satisfaction and will also to retain them. Using the social media extensively is also another way to boost sales by paying attention to the reviews, inputs, and comments and addressing them accordingly. Offering discounts on large purchases is also another useful way to boost sales.
If you are struggling with credit card debts and are unable to pay attention to your business then it’s important to solve your debt issues first. Checking out for credit card debt settlement and going for one can be a smart move. Research well and go for it wisely in order to solve your debt issues in a smart manner and have a stress free life so that you can give hundred percent to your business.
Cut Unnecessary Business Costs
Along with boosting the sales to increase revenue, you must also consider the unnecessary costs to increase your cash in hand even further. There are some easy ways to cut down costs that are running high in business as well. You can sell off that machinery and equipment that is not required often. You can consider buying used equipment instead of new or even hiring it if you use it sparingly. Downsize your office, consider a co-working space and spilled costs with other similar companies.
Refinance Your Debts
Refinancing your high-cost debts is also another way to increase your cash flow. This will help you to take a loan at low rate of interest to repay the original, and sometimes you get such loans at zero percent interest even, especially in cards. You can also consider shortening the payment terms and revise any long term payment plans. You can also offer early payment discounts or charge a late fine as effective collection strategies for the unpaid invoices.