Debt. It’s a word that can send shivers down the spine of any small business owner. Used strategically, debt can be a powerful tool for growth. But left unchecked, it can become a monstrous burden, threatening to swallow a business’s cash flow and dreams.
Being Accountable aren’t just number crunchers; we’re financial navigators. We’ve seen businesses soar to success with the right debt management strategies and others brought to their knees by uncontrolled borrowing. The good news is with a clear plan and the proper support, your business can tame the debt monster and turn it into a manageable companion.
Understanding the debt landscape.
At Being Accountable, our first step is to help business owners get a crystal-clear picture of their current debt situation. This means diving deep into the books and categorising the debts:
- Short-term debt: Includes accounts payable (money owed to suppliers), credit cards, and short-term loans. These debts typically have high interest rates and must be paid off quickly.
- Long-term debt: Covers mortgages, equipment loans, and business lines of credit. These debts usually have lower interest rates but longer repayment schedules.
Once you understand the type, amount, and interest rates of your debts, we can start formulating a plan with you.
Budgeting for debt repayment
A comprehensive budget is a roadmap to debt freedom. Being Accountable will work with you to create a realistic budget that factors in income, expenses, and debt repayments. This will help identify areas where your business can cut back and free up cash for debt reduction.
Employing an effective debt repayment strategy
There are several strategies you can employ to tackle debt, and we can help you to select the most effective one for your situation:
- Debt avalanche: This method focuses on paying off the debt with the highest interest rate first. While the initial payments might be smaller, your business will save money in the long run by reducing the overall interest accrued.
- Debt snowball: This strategy prioritises paying off the smallest debt first, regardless of interest rate. This can provide a sense of accomplishment and motivate you to keep going.
Renegotiating debt.
Sometimes, talking to lenders can lead to a more manageable repayment plan. Being Accountable can help you build a case for a lower interest rate or extended repayment terms. We can also negotiate with your suppliers for better payment terms.
Cashflow management is critical.
Debt management isn’t just about paying off existing debts; it’s also about preventing new ones from accumulating. Being Accountable can help your business with cashflow management, ensuring you have enough money to cover expenses and debt repayments. This can include:
- Creating accurate forecasts: Predicting future cash flow to avoid unexpected shortfalls that could lead to further borrowing.
- Managing accounts receivable: Developing a system for sending timely invoices and following up on overdue payments.
- Monitoring inventory levels: Streamlining inventory management to avoid overstocking and freeing up cash that could be used for debt repayment.
When to seek professional help.
While engaging Being Accountable can be a valuable asset in managing your business debt, there are situations where seeking professional help from a financial advisor or debt counsellor is advisable. This might be the case if:
- You’re overwhelmed by debt and don’t know where to start.
- You’re facing a financial crisis and need immediate assistance.
- You’re considering insolvency or bankruptcy.
Being Accountable: your debt management partner.
You don’t have to face the debt monster alone. With Being Accountable by your side, we can develop a strategic plan, implement effective strategies, and achieve your financial goals. We are your financial cheerleader, keeping you motivated and on track towards a debt-free future.
Call Jo on 08 8294 4222 or email jo@beingaccountable.com.au
