Are you stuck in debt? Trying to run a business while you or your company is in debt is grueling, costly, and risky. Here are 5 tips for getting out of debt without losing your business.
Small businesses filing for bankruptcy rose by 26% in 2016. When your business is deep in debt you face bankruptcy and losing your entire business.
This doesn’t have to happen though! We have some tips for getting out of debt without losing your business.
These tips include how to generate extra revenue and getting help. Remember that business debt relief doesn’t happen by ignoring the problem.
Read our tips, get organized and get your business out of debt.
1. Generate Extra Revenue
Look for ways to increase the cash flow coming into your business. Look for old inventory to sell. Get rid of assets that are no longer used.
Create a low-cost promotion such as a limited time sale, discounts, or coupons. This helps move inventory that is sitting around. This inventory is your business’s money tied up.
Sell off any old equipment your business may have. This includes old computers, office furniture, or raw materials.
This equipment is on your balance sheet representing depreciating assets. By selling it off you are trimming down the overhead and generating cash.
2. Ask for Help
Sometimes the situation is so dire you need some help. If you are struggling to create a get out of debt plan ask for help.
Companies like Hoyes, Michalos & Associates can provide you with a plan on how to get out of debt with no money. They will meet with you to get the full picture of your financial situation.
Once you agree to work with them they can stop collection calls and legal action. They also have relationships with creditors which can help you with number 5 on this list.
3. Collect on Outstanding Debt
If you have customers who have outstanding invoices, now is the time to follow up. Create a list of all outstanding invoices.
Start contacting the customers with the longest outstanding debt. While some may still refuse, you should get some cash flow from this process.
4. Organize Loan Pay Off
With the extra revenue generated, use it to pay off your outstanding debt. The first debts you should pay are key business relationships.
Your first priority should be to pay employees and key suppliers. Your business cannot run without them.
Next, pay debts with catastrophic consequences. These debts include your taxes or debt secured by personal property.
Finally, pay debts that do not fall into the other categories. Following this system will keep your business and reputation in tack.
5. Communicate with Your Creditors
Contact your creditors and ask to negotiate. Your creditor doesn’t want you to go out of business, so they are likely to work with you.
They might let you pay over a longer period of time. Or they may agree to a lower pay- off amount.
If you go out of business the creditor gets nothing. Negotiating will get some of their investment back.
Follow These Tips for Getting out of Debt Without Losing Your Business
Follow these tips for getting out of debt without losing your business. Start by looking for ways to generate extra revenue.
With an increased cash flow, you can start paying off your prioritized creditors. Then contact your creditors and look to delay any expenses.
Ask the creditors of your outstanding debts for a negotiation. If you need help with any of these tips contact a licensed insolvency trustee to help you.
Looking for ways to save money? Try outsourcing these 8 things to cut costs.