This week’s post is a guest post on the topic of debt and small business. Whether you are an employee or a small business owner, managing debt and keeping it to a minimum is a key factor for long term success.
With the onset of 2012, the lenders have already tightened their reins on the borrowers as well as the lending guidelines in order to reduce their risk to be subject to defaults on payments.
During the last quarter of 2011, there were many small business owners who were straining under the burden of growing high interest debt. According to the Automatic Access to Court Electronic Records, a total number of 8544 business organizations filed bankruptcy throughout 2011 and this figure saw a 565 increase from the same time a year ago.
While there are debt relief firms that can assist the business organizations to get out of debt and also stay out of it, bankruptcy is often the most sought-after option as they want to start afresh.
As bankruptcy stays on the financial records for 7-10 years, you should try your best to avoid such a fate and take help of some DIY get-out-of-debt steps. Here are some of them.
Curb unnecessary costs and release cash
The first thing that you need to do as a business owner is to identify the part or the departments of your company that has landed you up in debt and then attack them head on. When the customers aren’t paying back on time, your expenses will become too high and if you want to avoid all this, stay more stringent with your customers. Consider increasing the collection efforts so that you may be able to release cash and thereby attend your high interest debts. Selling off unused equipment may also be a good idea.
Prioritize your debt accounts
As a business owner, you have to tackle the highest interest debt first. Nothing can have a worse impact on your business finances than accumulating interest rate on debts. Unattended debts can give a serious turn to your business and therefore, take immediate steps to repay your high interest credit card debts or loans so that you can soon start repaying the next high interest obligation.
Re-examine your business budget
It is most likely that you have been following a budget in order to keep your finances on track. Since you didn’t achieve success with this budget, it’s time to re-examine your budget. Allot a portion of your budget to all the variable costs like the manufacturing materials. Keep track of your pennies so that you know where you’re spending your hard-invested dollars.
Negotiate with your creditors
Refraining from communicating with creditors is a very common habit among the business owners who are in debt. But if you’re wise you will certainly negotiate with them so that you can easily repay your debts without having to fall back on the other debt obligations. Request a hardship payment plan through which you can repay your debt in easy and affordable monthly payments.
Consolidate your debts
You can also get help from a debt consolidation company through which you can consolidate your debts into a single monthly payment. Tell them the hardship that you’re going through so that they can negotiate with your creditors and lower the interest rates on the loans and thereby facilitate the monthly repayment procedure.
Whenever you find your business organization accumulating debts, you should immediately take serious steps to contain them. Follow the debt relief steps mentioned above and also hire an accountant who can take care of your business finances so as to reduce the possibilities of incurring an unnecessary burden of debt obligations.
About the author:
Rick Murphy is a contributory writer associated with the Debt Consolidation Care Community and has written several articles for various financial websites. He holds his expertise in the Debt industry and has made significant contribution through his various articles.
To get debt related help visit: Debt Consolidation Carephoto credit: xJason.Rogersx