Tips for Paying Down Business Debt

 

Business debt is something that will inhibit your cash flow, scare away potential investors, and damage your credit rating. While many people do not worry very much about their own personal debt, just about every business owner stays focused on paying down their business debt. There are a few tricks you can use to get your corporate debt back to a level that you can handle.

Put A Stop To Monthly Pizza Parties

If you spend time examining your cash spending, you will probably find more than one regular expense that your company could live without. Buying lunch for your employees helps a bit with morale, but closing your doors for good because of too much debt is something none of your employees would appreciate. You need to cut out the frivolous spending and use that cash to pay off company debt.

Re-Evaluate Your Invoices

The next time you get an invoice from a supplier, take a good look at it to see if there are any incentives to pay the invoice early. Some companies offer discounts as much as three percent of the total value of the invoice if you pay before your terms are up. A savings of anywhere from one to three percent on your invoices will free up cash that you can apply to the rest of your debt.

Fine Tune The Spending Plan

There is no way around the fact that one of the reasons your company is in debt is because the spending plan in your budget is not working. Instead of allowing this irresponsible spending to continue, you need to take a look at the budget and make some revisions. You should also take a look at your expenses and consider working to bring them down. For example, you should bring in a different insurance expert to look over the coverage you have and see if you are paying too much.

Sublet Your Extra Space

Some companies drown in debt because they have not adjusted their physical office space to accommodate changes in their personnel. If your company is smaller but you are still in the same space, then it is time to put that space to work for you. Talk to your landlord about subletting that extra space to other companies and use that money to pay down debt. If your landlord won’t let you sublet, then it might be time to find a new business location that costs less.

Bring In A Professional

If your company debt is threatening to ruin your business, then it is time to bring in a debt professional to negotiate with your creditors. A debt professional can help negotiate lower interest rates with your vendors, and can put together a consolidation plan that will allow you to pay off old debt at a lower rate.

If you do not address your company’s debt issues, then those issues could eventually consume your entire company budget. Now is the time to take immediate action to find ways to lower your debt and restore your company’s cash flow.