Small Business Advice: A Guide to Getting Out of Debtsubmitted on 14 May 2020
Running a business is difficult. There are many different challenges an owner will face, and that includes issues with cash flow. Continuing to pay everyone from vendors to employees can be a serious challenge, particularly when you factor in the volatile nature of business.
After all, a business can be turning over a large profit one month and then struggling to shift any products the next month. When the latter happens, it’s not uncommon for a company to sink into debt to cover their bills.
In fact, statistics highlight that 70% of small businesses are afflicted with outstanding debt.
There are several strategies you can use to escape from this type of pitfall. If you’re ready to change your financial fortunes, here is a quick guide aimed at small businesses looking to get out of debt.
Don’t ignore a debt collector
First, if your debt has led to collectors chasing you up for payment, never ignore the issue. If you try to bury your head in the sand, any lawsuit will turn into a default judgement in the creditors favor. This means you will not only have to pay the debt in full, but you could also be faced with a bigger bill due to added expenses like court costs and interest.
When dealing with this sort of issue, it is recommended you get professional help with debt collector harassment or debt lawsuits. They will supply expert guidance and ensure you take the right steps to fighting back against a debt collector.
Shift your stock
Admittedly, this is a point you should always be aiming towards. However, if you have a considerable amount of money invested in your stock, quickly selling it on can release funds to pay off your debts
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To do this effectively, you could run a promotion to advertise the stock. This could be, for instance, a limited time sale. You might even want to provide a short-term discount code. These types of marketing techniques will typically entice more sales than normal.
Cut down on expenses
While it may not supply an instant injection of cash to pay off any outstanding bills, trimming your expenses can help with your debts – and avoid them from reoccurring in the future. The only issue is finding expenses which are disposable. Letting an employee go might be difficult, but it could ultimately help you to better balance the books. Alternatively, you can look for ways to reduce your marketing budget, or search for cheaper premises. Regarding the latter – and depending on the business – having a completely remote office setup might work.
Hunt those late-paying customers
For certain business types, waiting around for payments isn’t an uncommon scenario. For example, a marketing agency might take on a project, complete it, and then wait a month before a client pays their invoice.
This can be tricky for several obvious reasons. Yet if you have a backlog of late-paying customers, this presents an opportunity for a cash injection. Chase up all outstanding bills, and you could have the money necessary for your debt repayment.
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