How To Reduce Company Debt
Is your company losing control of the finances? It’s easy to underestimate your cash flow needs and end up in debt with credit card companies and micro lenders. However, obtaining credit is a necessary part of the business cycle, and it is needed if you want to grow. Managing your debt can be a challenge, and if you don’t keep a close eye on it, you can end up in a situation that gives you a lot of stress. Here are seven ideas you can implement in your business to control your spending and keep your creditors happy.
#1 Remember To Pay Yourself First
As a business owner, you may feel the need to support the businesses financial needs over your own. Many entrepreneurs would rather pay a bill than pay themselves. Do not take this approach, pay yourself first and show your subconscious mind that your effort is valuable. Creditors will always be there, but your finances may not. Make sure you take care of your back yard before you take care of anyone else’s.
#2 Never Miss A Monthly Payment
Your creditors require settling every month and missing out on an installment could end up costing you points on your credit score. Make sure that you make a payment every month, even if it is just the minimum amount due.
#3 Pay Highest Interest Loans First
Different loan facilities have different rates of interest charged to your account. Do a review of all of your creditors and look for the accounts that have the highest interest rate charges. Store cards and credit cards have very high interest rates. It will benefit you to settle these accounts first as the money you save in interest is as good as savings in the bank.
#4 Tighten Up Your Finances
Where can you save money in your business operations? Loom to cancel any subscription services that are not giving you full value and any other areas of your expenses that you can cut back on to save money to settle your debt.
#5 Consolidate Debt Where You Can
It’s a good idea to consolidate your debt wherever you can. Having multiple credit cards. Store accounts, and hire purchase agreements can be expensive. Speak to a micro lender and ask how to get a debt consolidation loan that allows refinancing your debt into one single payment for everything at the end of the month.
#6 Make Personal Sacrifices
Sometimes business owners need to make sacrifices for the good of the company. Does your car need to be the latest model? Could you be making savings on your cell phone contract and personal expenses? Reduce your monthly expenses on items that you can live without and use this money to pay off your debt.
#7 Increase Sales
The simplest solution to eliminating your debt is to produce more income. If you earn more money, then none of these issues would ever exist. Call a meeting with your marketing and sales teams to find out what you can do to increase your sales targets and earn more money that you can use to settle debt and expand the company.
Getting into debt should not be something you shy away from forever. There are both good and bad forms of debt. Taking on debt to buy a machine for your company that produces income is a form of productive investment that is worth taking on debt to purchase. However, taking on a loan to support expenses is a big mistake that could land you in a lot of trouble. Follow these tips and be responsible with your credit in the future.