Debts can lead to serious failure of a business if not taken care of. They can cause bankruptcy which can ruin the entire reputation of the entire business. To make it worse the reputation is ruined not only for a short time but also a long time.
I know you are wondering:
How can I avoid debts? Luckily this article shows you exactly how to avoid them.
Join me as I walk you through these key things you should consider.
- Be Accountable
Be requesting for loan a company should have a clear plan on how to use the funds. Loans should be used to do business and not pay other debts.
Effective management is the root to accountability. A company should have a team of experts on key spots such as management on how funds are supposed to be used.
Manager should find out the main cause of debts in the first place and attack them head.
- Cut off unnecessary expenditures
To avoid money deficits. Cut off unnecessary expenditures such expensive phone calls or buying stuff you don’t really need in an office. For example selling unused electronics and investing the cash on other profitable projects.
- Have an understanding of your customer
Before loaning any customer you need to make sure they have a good payment behavior. Make the customer aware of your expenses and the need to clear them as early as possible. You should come up with a repayment plan for the debtor to enable them settle their debts without having to push them.
The repayment plan should be convenient to the customer.
- Revise your budget
If your revenue doesn’t meet the monthly expenses such as rent etc., then it’s time to put up a budget that works for your business. The budget should be made according the financial situation of your company. Here are two ways you can use to keep track of your budget:
- Use of software’s such as QuickBooks. Or Quickens.
- Hiring a financial planner
- Debt repayments
Prioritize on paying the highest debts that your company may have. This is where you should concentrate all your energies to especially the cases where the creditor can come after personal assets.
Give high priorities to such kind of debts.
- Ensure you have constant communication with your debtors
Staying in touch with those who owe your company money is paramount. Such proper communications can settle the debt without having to involve or take legal actions.
- Ask for help
If a matter gets out of hand, calling for help may be the only way left after trying all ways to get your debts cleared.
Something just one legal letter from the authorities can settle the whole issue
- Merge your loans in one
Short-term loans can be merged into a one-time payment to ensure payment is done in once and for all to avoid monthly payments which can drain off your finances.
This reduces your monthly coasts without harming your credit.
So what’s the bottom line?
Always pay your loans on time and also make sure those who always owe you money pay on time.
No company wants to bankrupt at any one point.
Do you have other suggestions? Please comment them below. Would love to hear from you!