Debt isn’t always a bad thing for business.
Sometimes taking on debt is necessary to develop, expand and grow a business. Sometimes, however, debt can get out of hand either due to taking on too many loans or if the business doesn’t bring in enough revenue to keep up with repayments to name but a few reasons. So what can you do to try to work your way out of debt fast before it has an impact on your business?
1) Try to increase your business revenue
One thing you need to get out of business debt is an increase in revenue. This might sound simplistic but as everyone in business knows, increasing revenue is not always easy. One of the best ways to increase revenue is to work harder on increasing sales to existing customers rather than spend more money trying to find new ones. You could offer special promotions or even put on a sale to get money coming in again. There is little point in hanging on to stock or charging high prices for a service nobody is purchasing from you.
2) Shorten your payment terms
This is easier for some businesses than others, but maintaining cashflow is critical to business survival. Many businesses go under even when on paper they will have had sufficient sales. Unless bills are paid, then the money to make debt repayments is unlikely to be in the account either. Shorten payment terms to ensure too much time doesn’t elapse between providing a service and getting paid for it.
3) Sell off what you don’t need
You may find that you have accumulated a lot of equipment and other items that are no longer useful to your business. This might be a good time to consider selling those items to help contribute to paying off debts.
If you have any questions or queries, please contact a member of our Insolvency team today.