The prospect of business debt, whether it’s mounting or not can be a daunting one. When you have invested your money, soul and tears into building your own business, failing to be able to make payments on business debts can have devastating effects for all involved.
Increase Cash flow
Obviously, this is an ideal scenario for any business, as ultimately increasing the cash flow leads to increased profits. Rather than only focusing on the acquisition of new business, look at the efficiency and productivity within the business. Areas such as marketing and PR can have an incredible impact on sales within a business, so explore new creative marketing strategies to expand your exposure.
Pay attention to the staff! Are they content and confident working for you? Happy staff are productive staff, and productive staff are possible. Make a concerted effort to communicate with your team and find out how you can make them more productive. Do they need more training or is there new technology in your industry that would make their working day more productive?
Re-visit the payment terms that were agreed with your vendors and clients. Payment terms tend to range from 15 days, to 30, 45 and even 60 days the goods or service has been delivered. A great way to incentivise early payments for both parties is to look at agreeing on a discounted price for an early payment. With regards to vendors, agreeing on further discount for bulk buying will also increase your businesses cash flow.
Excess and stagnant stock will not make you money. Look to optimize your inventory processes if this is relevant to your business and be sure that you are familiar with vendor’s stock return policies.
If you have empty space or even just a few desks in your office then you may be able to rent them out to those looking to share office space. Around 600,000 start ups were created this year and many of them cannot afford their own afford space, so by renting out space to these young companies, not only supports the innovative scene but provide affordable space to work whilst providing you with extra revenue.
Look at your interest rates
Try and keep up to date with current interest rates. If the interest rate on your business loan is much higher than rates currently being offered, it is worth considering refinancing with a loan that offers a lower rate. It is good business sense to lock this reduced rate down with a fixed rate of interest, to future proof the debt. This will give you piece of mind that your repayments will remain stable, even if interest rates peak.
If you have balances on business credit cards, be sure to take advantage of interest free periods by transferring the balance. This may seem like a time consuming exercise, but you are able to find cards that offer up to 36 months interest free, so the process will not become an annual exercise.
However, if you have a good credit rating and have been with a card issuer for a reasonable length of time, you could discuss a reduced interest rate.
Consolidating debt can vastly increase your cash flow and enable you to reduce any debt. If you are paying a number of loans to a variety of companies, chances are that you are paying varying rates of interest. By consolidating all of your loans to one single monthly payment, you can dramatically reduce your interest rate and in turn, your monthly repayment.
There are ways and means to reduce your debt that you have not yet considered, or possibly aren’t aware of. Consulting your accountant will allow you to streamline your business debt and find a more manageable solution with regards to monthly repayments.