Debt management is a critical factor when it comes to the success or failure of a business. These tips can help your business keep its debt under control.
Keep Records
Keeping records isn’t the most exciting task, but it’s one of the most important things you can do to track and manage business debt. Luckily, this task isn’t as daunting as it may seem at first glance: Melissa Kincaid of Seattle Business magazine writes that accounting software can make advanced bookkeeping available and doable, even for small businesses.
Know Your Expenses
Tracking your business’s financial data will let you perform an important task: keeping an eye on your daily, weekly, monthly, and yearly expenses. You should have a handle on your company’s fixed and variable expenses as well as any applicable interest rates. That, in turn, can help you decide if you need to be cautious about taking on more business debt.
Know Your Priorities
Once you have a detailed understanding of where your business’s money is going, you can prioritize payments. Always make sure that, at the very least, you honor all monthly minimum payments: Failing to do so can be disastrous for your business’s credit score. However, once you have those bases covered, consider putting extra payments toward your higher-interest debt obligations.
Always Negotiate
Negotiating is a way to keep business debt from piling up in the first place. For example, bulk purchases from vendors may be a way to unlock discounts.
If your business debt is approaching an unmanageable level, also keep in mind that negotiating may provide some relief. For example, refinancing to a longer-term arrangement is a way that many businesses free up cash flow by reducing monthly payments.
To learn more about financing, just check out our other blog posts, or get in touch with The Capital Rams to learn more about what we can offer!
