Is your Company in Debt?
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Determine your current budget.
Keep a record of all money moving in or out of your company for two weeks—or a month. Need help to create a budget?
Acknowledge any mistakes you may have made and rather than dwelling on the past, though, try to agree on a way forward and correct in making future financial decisions.
Reduce your expenses.
With reducing cost, this is the fastest way to start floating again. Stick to the car or fleet of vehicles you have right now. Do not upgrade right now. Start with the most significant expenses and work your way down. Even the little ones can save you money. TRY THIS: Once you have prepared an initial budget, discuss how everyone, your managers and staff members can reduce expenses or increase the companies income. Involve your staff to show you where it is possible to “save” or reduce costs (money) – you be surprised what they have to say. Seeing one another’s sacrifices can help to pull you together in the fight against debt and staff will feel like part of the business. They may have noticed a saving that could be done for a long time and did not feel like saying anything and talking up. Reduce your utility costs by conserving electricity, water, and heat. Office and or workshop: If possible, move into premises with a smaller monthly payment, or if you have two locations or more – can you combine them.
Analyse your debt and act.
First, determine for each debt the interest rate, the fees, the impact of a late or missed payment, and the possibility that the payment is already overdue.
Examine the wording of the loan or bill carefully, since creditors may be deceptive. For example, one short-term loan service in the United States stated that its interest rate was 24 per cent, when, in fact, it was over 400 per cent.
Next, determine the order in which you will tackle your debts. One approach is to pay toward the debt with the highest interest rate first. Another option is to pay off smaller balances first, since receiving fewer bills each month will likely boost your morale. If you have loans with a high-interest rate, you might benefit from getting a new loan at a lower interest rate to pay off the existing ones. Talk to your bank for some advice. Get us involved to give you a budget or profit & Loss statement to convince your money lender.
Negotiate new payment plans.
Finally, if you cannot meet your obligations, try to negotiate new payment plans with your creditors. You could ask for an extension or a lower interest rate. Some creditors may even be willing to reduce what you owe if you can pay the smaller amount in full right now. Try to make a payment plan with a reduced amount until you get out of the debt. Creditors are humans as well, and it is better to have something slowly than nothing at all! Be honest and courteous in explaining your financial situation. Some people hate doing this; ask us, and we can assist you in this matter.
Put any agreements in writing.
Even if your first request is not successful, be willing to persist in asking for an adjustment if necessary.
Of course, you will need to be realistic as you manage your finances. Even the best plan can fail as a result of factors beyond your control since money often “makes wings for itself like those of an eagle and flies away toward the heavens.
The borrower must realise that until the money is paid back, he is under obligation to the lender. We have an African saying: “If you borrow a man’s legs, you will go where he directs you.” The idea is that one who is heavily in debt is no longer at liberty to do what he would like.
How can you increase your income?
If you sell products, can you buy them cheaper from another source? If you sell products that you are manufacturing, can you make it more efficient to produce, can you find better ways to make it, can you find other cheaper parts without downgrading the product.