Debt is a daunting factor for any business, no matter how successful it may be.
If your company is struggling with debt, then it is vital that you find out the information you need to help either resolve or help the situation, because sometimes a simple, tailor made plan can be what’s needed to help you through the process.
Here at Forbes Burton, our team of business rescue and recovery specialists are here to help you with this daunting task. In this article, we are here to provide helpful advice and standard methods we recommend to help get your company back on the road to good, financial health.
Don’t Hide It
As tempting as it may be to bury your head in the sand and not admit to the problem, the first thing you must do before your company debt becomes too much, is to start talking.
We recommend that you speak to your creditor and provide a brief explanation of the reason for this financial hardship your business is currently facing and then request a setting up or reorganisation of payment terms.
With this subject, you need to be realistic about how much your company can comfortably afford to pay and keep it at that price. If you set the payments too high, then you may find it difficult keeping up with them, but too low, and they may not be acceptable to your creditors.
It is important, you make it clear to them that by accepting these new payment terms, that there will be a greater likelihood that you will be able to pay them.
Most creditors do understand this and are mostly willing to come to an arrangement that suits both.
Plan & Prioritise Effectively
Don’t hold back on prioritising your debts in order of importance. This should be one of the first things you do during this process.
When prioritising your importance of each debt, it means that the ones with the high interest rates and those where you have acted as a guarantor or where you have offered personal assets, are the ones that you need to deal with first.
When you go through the process, make sure you spend some time going over all of the contracts and agreements that yourself or your representatives have signed to make sure nothing is caught out.
If your business has several outstanding loans, then it may be a good idea to look and consolidate these into just one payment in order to reduce your outgoings.
Remove Any Unnecessary Company Costs & Create Ways To Increase Revenue
One of the quickest ways a company can go into debt can come from customers failing to pay their invoices.
As a business owner, look at ways you can improve collection of these payments, and you may need to consider setting up a new payment plan or chasing late-paying customers more vigorously.
Could you incorporate incentives to entice early payments?
On the other side of the spectrum, if you always pay your invoices promptly, then why not consider taking advantage of those times when you are given a longer period in which to pay. Although, we only say this if you ever offer early payments, you do not want to be going beyond the payment date, as your reputation is at stake.
After you have analysed this area of your business, it is a great idea to look at what you could sell off to raise capital and remove any unnecessary expenses.
You may find you have equipment or systems that are simply not an essential part of your business and may not add anything to your overall productivity, but could be a drain on your company finances. You could also look at downsizing your office or warehouse space if possible.
If you have any unused or out of date equipment, then sell. But, if you have any that may compromise productivity, then you could consider leasing. Although, it may be possible to sell for a good price and therefore raise the essential revenue, whilst still having the use of the equipment at times you need it.
If possible, as a company, why not see if you could hold special promotions, discount offers or time-limited sales as a one off revenue raiser?
Deciding to go over your marketing strategy can see whether you are reaching the right customer base, or if your current strategy needs updating and the current strategy could be the reason as to why you are not getting those all important sales.
Take time to see if you can identify gaps and find out what customers really want from your sector.
Use Your Skills
If you are in a strong enough position to do so, then why not consider taking a second, part-time job?
Providing it does not interfere with your business, it could help bring in extra money to your company. Perhaps you could look at whether your skills could be used on a freelance basis?
Take Time To Analyse Your Budget
If you find yourself in a never-ending mess, it could be that you are not focusing enough on your budget, which should be based on your current situation and not on the one you had from 5 years ago.
Whether it is in household to business budgeting, the principle remains the same.
Your outgoings must not exceed your incoming revenue. Crucially, it will help to just have one person or department in charge of all of your finances, as it is much easier to keep track of your incomings and outgoings.
It helps to allocate certain portions of your companies budgets to certain costs, for example, utility bills, suppliers costs and then debts.
A good accounting software package can help you to keep track of your finances.
There are debt resolution specialists, like ourselves, who are here to help with confidential advice and support.
No one is alone with business debt, so if you feel you are facing similar problems, then find the help you need today to help your business strive again.