Almost Drowning in Business Debt?

Are you almost drowning in business debt? Here are some suggestions to keep you from crossing the line.

First, you must analyze each and every operational cost from Wages to Office Supplies. If you are paying an employee that is not being fully utilized or not producing a profit, you must take action (Cut hours or cut the employee). Review accounts receivable and increase collection efforts, if need be. Refuse to service past due accounts without a payment and then ship C.O.D. When things are tough, everyone must get along with what you have or make do and improvise. Cutting overhead is where you start.

Next, prioritize your debts. There are several non-negotiables, as no business can survive without a source of raw materials or products, and keeping the rent paid and the lights on are also real high on the list as well. Business debt management is the key.

To survive, a financially troubled business must develop a system for prioritizing their debts. We suggest a very simple one. Create a list consisting of three sections. #1.Those suppliers and services you absolutely must have to service your customers. #2. The people you would like to do business with but can find the products or services elsewhere. #3. The creditors you will not be doing business with again for whatever reason. Keep this list available.

Debt collectors are a very important part of business today. Collecting delinquent accounts can sometimes mean the difference between profit and loss. Your creditors may realize this and have taken steps to employ some very good collectors. Keep this in mind.

Now that you have your list and you know how determined the collectors are, you must stand your ground. If you spend your resources on #2 and #3 creditors instead of #1 creditors, your troubles will grow. We refer to this as robbing Peter to pay Paul. Using today’s dollars to pay last years debts. You are in a survival mode and you must use what you have to your best advantage.

You may now realize that the acronym COD or CIA come up when you try to place orders. If it is not happening now, it will soon. It is important that you accumulate cash funds to be able to meet the COD and CIA terms for those very important products. Remember when you can’t deliver orders promptly they can be canceled and you lose a customer. Do not spend your resources on #2 and #3 creditors.

If you are continually getting pressure from collectors don’t give in and don’t make promises to pay when you are not positive you can. Unkept promises can make you out to be a liar and that gets troublesome when you really want to settle the debt. If the pressure is too much it may be time for business debt consolidation. Consult with a debt management company like Financial Technologies. We are involved with these circumstances every day and can provide the service you need or we can supply some cost free advice.

In summary, prioritize your debts, conserve your cash, don’t make promises to collectors and get help if you feel you are in over your head or if debt management is taking more time than servicing your customers.

- TheDebtDr
http://www.financialtechnologies.com/