Accounts Management

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Managing Debt

 

Debt. The very word can inspire a sense of doom and hopelessness. But there are several strategies for small businesses with large debts or financial struggles.

 

Debt Collection/Credit Management Companies

 

Debt Collection/Credit Management Companies offer education, advice and credit management strategies. Some also offer debt consolidation and repayment programs.

 

It's critical however that you read all of the fine print and do a thorough background check on any organisation that claims to help you with your finances. If in doubt, use a reputable company or look into any legal records.

 

The most reputable organisations require an education component to any service they offer so that you or your business avoids falling into debt again in the future.

 

Step up the collections process

 

Consider running credit checks on potential customers or offering a discount for early or prompt payments. Hiring an outside agency to collect on some of your most delinquent accounts is another strategy. They usually take a percentage of the accounts that they receive payment on.

 

Carefully consider before selling assets

 

While excess property can be converted to cash, finding a buyer for specialised equipment can be difficult and it may be sold at a loss.

 

Weigh the pros and cons of debt consolidation programs

 

If you have few creditors or stand to benefit from much lower interest rates, a loan consolidation program can be a good idea. However, consolidating widespread debts can be unattractive to potential lenders, and might reveal that a business has overextended itself.

 

Liquidation and bankruptcy is the last resort

 

For small businesses especially, bankruptcy can be the ultimate death of a struggling business.