Debt can happen just as easily to a business as it can happen to any individual. If you have trouble managing your cash flow or lack the financial protection you need to deal with an emergency, you may have to take money that you have trouble paying back. Here, we’re going to look at some of the options available and which might be best to meet your needs.
Streamlining your business
It’s wise to have a plan to do this ready ahead of time, but if possible, you should look at what you can start to cut from your budget. Identifying expenses that you eliminate or at least downsize can help you more easily save the money you need to pay back your business’s creditors. In the worst case scenario, this may mean letting some members of staff go.
Restructuring your debt
If you’re on an existing finance or asset loan, then you may want to consider refinancing it to lessen your overall debt. Sometimes, it can result in lower interest rates and better repayment terms. For multiple debts, consolidation can help you put them all together in one account, and may reduce your interest rate. Additionally, exploring options like unsecured business loans can provide flexibility for your business without putting your assets at risk. Restructuring doesn’t always result in better terms, however, so be sure that you understand any refinancing or consolidating deal before you take it.
There are two people you should be negotiating with right now: those who owe you money and those whom you owe. If any of your customers or clients have outstanding invoices, now is the time to get in touch and pressure them to pay. Otherwise, consider calling your creditors and telling them about your situation. You may be able to get some leeway. It’s important to contact them before they contact the collections agencies.
Start with a clean slate
Bankruptcy is never an easy thing to recommend. People are afraid of the word and it’s not unreasonable. Bankruptcy can make a significant mark on your business credit but, in exchange, it can help you liquidate and get out of deepening financial trouble. With the help of a bankruptcy lawyer, you could help reduce how much money you have to pay back. You can also decrease the amount of financial stress that ongoing debt can cause.
Prevention is the best cure
Lastly, if you’re in business debt, it’s important to learn a lesson from it. Address what got you in this position in the first place and put in place the protective measures you need to stop it from happening again. For instance, adopting an open banking business strategy can help you monitor your financial health more effectively and make data-driven decisions. If there was a workplace emergency like a flood that you weren’t insured for, open banking can also help present the best financial option to resolve the situation. You will also know next time to make sure you have all the insurance that you need.
Business debt can happen to anyone and it’s not the end of the world, even if it does end up impacting your business permanently. Hopefully, the tips above show you what options you have and give you some ideas on how to deal with your current situation.