Debt shouldn’t be the only thing on your mind.

As an owner, there is a ton of pressure to make sure your books are balanced. But there are times when debt may begin to take over and it’s all that you can think about. Whether it is caused by something like a recession, industry changes, or unexpected growth; debt can be devastating.

Regardless of why you’ve accumulated it, know that it can be fixed. Debt can actually be used as a tool to become more aware of your circumstances and to grow your business. Continue reading below for our top five debt management tips.

1. Get Aware

If you feel like the debt is getting out of hand, don’t panic. Instead, you should assess the situation in a realistic manner. Then, begin doing everything possible to reduce it.

That’s because it’s only once you know how much you owe, when and to who, that you can plan a way out. For example, knowing how much you spend on critical things like payroll, vendors, and suppliers vs. things like equipment and inventory can help you create a budget. That way you can plan ahead and know where to allocate money.

2. Increase Revenue

Increasing revenue may seem like an obvious way to reduce debt but many owners tend to struggle with this, especially when they are stressed out and feeling uneasy. However, doing things to drive sales like offering mark-downs or promotions can be a great way to increase cash flow.

Owners should also consider speaking with a financial professional like a planner or banker. Someone who is in an objective position to analyze your financial state and suggest some things you can do to increase profit.

3. Speak with Lenders

If you’re starting to find yourself in a tricky situation with your debt, be honest with the bank or lender. Most of the time, borrowers are surprised to know that they have options if they are struggling to pay.

Payments and loan terms can actually be renegotiated. This means the terms of it will change to reduce the interest or possibly spread it over a longer-term. Making it easier for owners to keep up with the debt.

Another option that could be reached when speaking to the lenders is to consolidate. Doing this will move all of the debt to one payment. In turn, making it easier to keep on top of it, reducing the monthly cost and all without any impact on your credit score.

4. Reduce Costs

If your business is in a bad place financially, you will obviously need to cut costs. But there is a smart way to go about this without impacting the success of your company.

Begin by assessing all of your expenses to determine where your largest costs are going and if you can cut down on them. For example, if the biggest cost is rent, consider switching locations or scaling back on the size. Another idea is to try and negotiate with supplies (especially if you are placing regular and large orders) or to find alternatives if one is not willing to work with you.

5. Schedule Payments

Nothing will impact a credit score more than a missed payment or delinquent account. So, avoid negative repercussions by making sure payments are automated. This is done by simply allowing a monthly withdrawal from your account for the bill. That way, you don’t accidentally miss a due date that can lead to higher interest rates, additional fees, and less leniency from the lender.

If you’re an owner struggling to keep track of your debt, consider getting some professional help by speaking with us at 407-328-5001.

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