The difference between eliminating business debt and personal debt is simply who’s responsible for repayment: the business or you. However, if you happen to be the business owner, you’re the one in charge. Here are a few suggestions to help you plan your journey to eliminating business debt. With commitment, you can realize your goals sooner than you might think.
- Create a budget, be realistic, and stay within it. This might sound obvious, but it’s easy to lose track of expenses, especially when some are unexpected or miscellaneous. Having it in writing puts it stark black and white. At the end of each month, any remaining income after expenses are met can be used to make extra payments toward debt.
- Set priorities. With interest-bearing obligations, such as loans and credit cards, prioritize your debts in order of highest interest rate.
- Close more recent credit accounts. A business only needs four open lines of credit to maintain a favorable credit profile, according to AllBusiness. If you’ve managed to pay off any accounts less than a year old, close them if they exceed the four you require.
- Use cash. Break from the habit of using business credit lines and cards to make purchases; using cash or a cash equivalent such as checks will give you a finite sense of what you can afford, help you stay disciplined, end prevent existing credit debt from increasing. If you have credit accounts with vendors and cash is not practical, pay your invoices in full on the due date or upon receipt of goods.
- Tighten the belt. Shop around whenever possible, especially for business and office supply purchases and big-ticket items. Whenever you come in under budget, put any money you save toward debt elimination.
- Negotiate with your creditors. Some creditors, especially if you’re in good standing, may be willing to either reduce your total balance due or work out a payment plan if it means they can get their money in full sooner rather than later. It might not work with all of your accounts, but it’s certainly worth a try.
- Find ways to increase income for your business. Run a sale, offer exclusive savings deals for existing customers, or introduce a new service or product. While mechanisms designed to save money for your customers may bring in less income per transaction, they could also help increase sales volume, thus bringing in more money in the longer term. Again, earmark any increase in income towards eliminating your debts, starting with higher-interest obligations first.
- If all else fails, look into business debt relief options. If you’ve included all these approaches in your plan of attack and are still having trouble eliminating business debt, then reach out to a business debt relief lawyer. At ZocLaw.com, our experienced professionals will analyze your financial situation and customize a strategy specifically for you. Schedule your free initial consultation to find out more about:
- Merchant Cash Advance Debt Relief