If your business is in debt that is spiraling out of control, you can take some measures in order to take control of your debt. Doing this will afford you more liquidity for business growth.
You could go online and search for debt relief companies with a debt relief package that will be suitable for you. A highly recommended website to look into is www.nationaldebtreliefprograms.com.
Bear in mind that as you go to a debt relief company some of the advice that you will get in order to manage your debt includes the following:
1. Focus on what you can Control
You need to focus on discretionary debt first.
This means that you should focus on dealing with debt that you can easily restructure or agree with your creditors to pay later, before dealing with debt that you have to pay immediately without fail.
2. Determine how much debt you can handle
It is important to determine how much debt you can safely handle. There are several ways to come up with how much debt your business can handle but they will primarily revolve around 3 key metrics:
• Your discretionary income (Income left after expenses.)
• Your investments, savings and overall liquidity
• Your prospective current and of future business
Go into your financials and determine the values of these 3 key metrics are.
You may need and accountant to do this for you, but it will be better if you go through the process by yourself so that you have the confidence of knowing how your business is performing.
At least, let your accountant or a financial professional take you through the numbers and on how the professional arrived at the figures.
3. Determine how much you can Allocate to Paying Off Debt
By determining your discretionary income, you will be in a better position to know how you can negotiate your debt relief package.
You calculate your discretionary income by subtracting all your expenses from all your income. If what you have left is a positive number, then that is your discretionary income.
Be careful to consider money that you have allocated to essential needs that your business requires as well as small amounts like bank charges that you are likely to ignore.
4. Estimate Your Personal Debt Redline
After you determine how much discretionary debt you can handle and how much discretionary income you have, you can quickly estimate how much leeway you have for taking on more debt or tightening your belt further in order to get a better grip of your finances.
Generally, if you are at the point where you need to handle your spiraling debt through a debt relief program, you should not take any more debt. You should focus on being frugal enough to allow your business to survive first.
With an improved financial attitude and discipline to monitor and act on your debt relief conditions, you will be able to get out of debt and be on your way to business growth. Focus on building your savings and only take debt that you can handle.