Tips for Eliminating Business Debt

Business debt is very much like personal debt. The only difference lies in the fact who is going to pay the debt - you or your business. If you are the owner of the business, no matter the debt is business debt. But you will be the one who will have to take charge and take initiatives to eliminate the business debt. With a solid plan in hand and a commitment to eliminating the debt, your business can soon be debt free.

Let's have a look at some tips that you can follow for eliminating your business debt.

Consider Having a Pragmatic Approach

Set a realistic budget. Even though if you think you can handle all your business debts and expenses, it is recommended to put everything in a written form. It will help you get a clear view of the amount of debt your business has. Prepare a list of all of your monthly business expenses. Spare some time to tally up the monthly income of your business and make a comparison of the numbers. The amount of money that is left after all the expenses is the money that you can put into the business or use to make extra payments on bills to eliminate the debt.

Prioritize Your Debt Payment Process

Make it a point to prioritize your debt payoff process. In case of restaurant franchise loans, credit cards and other types of debt, prefer arranging the debts according to the rate of interest. Plan on making additional payments and paying off the credit cards, loans and debts with the highest interest rate first.

New Credit Accounts Should be Closed

Close all the new credit accounts. Your business actually requires 4 open credit accounts to maintain a positive credit history. Once you are done with the payment of balances, close the accounts that are less than a year old. If your business exceeds four accounts you need to maintain the credit history.

Prefer Paying in Cash

Make it a point to pay in cash. Change the way you pay for other business expenses. Instead of making purchases using a business credit line or business credit card, prefer paying in cash. Make payment to the invoices of your suppliers / vendors within stipulated time-frame. Eliminate all your credit accounts and pay up-front or upon receipt of the products / services.

Reduce Your Expenses

Cut down your overall expenses. Only purchase whatever you require. Instead of using the extra cash spend on new items, use this money to make payments on credit and debt accounts to get rid of the debt altogether.

Negotiate with Your Creditors / Lenders

Try to negotiate with your creditors and lenders. Get in touch with your creditors and lenders to see if you can work out a plan to repay your debt faster. If your business is having a good flow of revenue, you can negotiate the balance due if you pay the account off in full. Some creditors and lenders might reduce the total balance upon receiving the money before the due time.

If the above mentioned tips do not work for you, then you should seek a business debt consolidation company. A debt consolidation company prepares a debt elimination plan for your business, and helps you implement the plan accordingly.