Keeping your business afloat takes perseverance and a lot of hard work. It’s often a hit or miss–some succeed in one go, but others often have a rocky start. But with the right attitude and surefire strategies, entrepreneurs can make it out.
Take note of these small business debt recovery tips from New Wave Gold Coast Accountants to create the fastest way to financial freedom for your business.
- Realize your debt and face it head-on.
Accepting that your business has a deficiency is never easy to deal with. But you should understand first and foremost that a debt does not equal to failure. Once you have that in mind, you can start to deal with it and conquer it head-on.
The best way to start paying off debt is to first prioritize what you’d like to pay off. You can categorize your loans or debt from largest to smallest. Some choose to pay off the largest debt first as this creates a huge sense of confidence and relief.
Another way to get on top of your debt is to consolidate it. You can take out one larger loan at a low-interest rate and use it to pay off a lot of smaller higher interest debts.
- Communicate with creditors and lenders
Once you’ve figured out the amount of money you can allocate towards outstanding debts, contact creditors to see if they’re open to arranging agreeable payment terms. Ask your lenders about available loan-consolidation programs, which can group multiple loans into a single monthly payment.
Furthermore, find out if you qualify for a hardship plan that includes a lower interest rate and payment extension. Creditors typically require a hardship letter that explains your current financial situation and provides proof that you require assistance to meet your debt obligations.
- Reduce your business expenses
Next, take a look at your operating costs. Your financial statements can be particularly helpful in pinpointing expenses contributing to your debt. Cutting costs may be the fastest way to increase cash flow and chip away at your liability.
So now, figure out which expenses you can axe versus services that are necessary for the daily operation of your business.
If you’re leasing an office, consider subletting unused space or downgrading to a smaller work area to reduce your monthly rent. You may also be able to negotiate reduced prices and flat rates with certain vendors. Also, you can cancel your subscriptions that you use infrequently or perhaps suspend professional memberships, at least until you get your financial house back in order.
- Maximize your business revenues
In addition to looking at the amount of money that you are spending on debt payments, you also need to evaluate the money that you are receiving.
Aggressively building your income will be a fast way to pay down the balances and will help you feel motivated to reduce your small business loans and build your company for the future. For starters, you can try to increase the prices of your products to a reasonable amount or diversify your services.
You can also offer mark-downs on merchandise and discounts on services, especially for loyal and repeat clients. Also, ramp up accounts receivables by following-up on late payments from customers. For instance, presenting your clients with discounts for paying fees upfront can help improve your cash flow. These strategies can help increase customer sales and will, in turn, boost your revenue.
- Revise your payment plan to shorter terms
If you run a business where deferred payments are accepted, you may want to revise your payment plan to shorter terms. Outstanding invoices can take up to a month or more to be paid. Call all clients with outstanding payments, or send reminders of their past due payment. You can also enable a penalty fee into your contract for late payments moving forward.
- Seek help from the experts
If efforts to climb out of business debt have failed, then maybe it’s time to enlist help from a professional debt-restructuring firm.
These professionals do the hard work for you: negotiating with creditors and collection agencies on your behalf to formally extend, renew or change existing credit agreements. The debt-restructuring process generally involves a written contract between you and the debt-restructuring company, as well as the setup of automatic withdrawals from your bank account to settle outstanding debts. Although a debt-mediation firm typically costs a monthly fee, it’s usually a less-expensive alternative to filing for bankruptcy.
New Wave is a company of Accountants Gold Coast that understands the issues faced by businesses, including small business debt recovery. That’s why we’re here to help businesses reach their goals through strategic accounting and bookkeeping. Some of the specific efforts include creating an efficient, up-to-date bookkeeping solution, minimizing tax, analyzing and creating a strategy for cash flow, increasing business profitability, and growth and succession planning and retirement. Imagine your business with more profit, better cash flow, and less tax. Contact New Wave Accountants Broadbeach today!