How to handle your debt for your business

Statistics are showing that the number one reason for most business failures is directly connected with financial management. Business owners that can’t manage money to handle payroll and rent usually end up bankrupt really fast. This is the reason why knowing options available for effectively and methodically paying the business debt is crucial. Being proactive will allow you to manage your expenses before they get out of control.

Business budget rework

Try to understand your current financial situation the best you can before attacking debt. You should definitely revisit your financial plan if you notice that your monthly payments are falling behind. Try adjusting for unexpected changes in income.

The one thing that identifies your variable expenses, fixed costs, and income sources is your business budget. If you get into budgeting you will notice that saving money for suppliers, landlord, and creditors is not something that you can’t do. It’s also not a hard thing to achieve but gives motivation.

You can seek counseling from a professional accountant, or visit different sources online like IVA to get the best advice on budgeting. Much different software is also available for different purposes when it comes to budgeting. All in all, revising and revisiting your budget will definitely help you to form a plan and get better at managing costs.

Business expenses

The next thing you have to pay attention to is operating costs. Figure out which expenses are necessary for your business to operate on a daily basis, and which expenses you can cut short. For example, cancel subscriptions you don’t actually use often, cancel memberships that you definitely don’t need until your finances are in the right spot again. Use an accounting software or consult with your accountant to understand what you can expect after you cut costs in different areas.

Consider downgrading to an area that’s a lot smaller than your office you’re leasing at the moment. This will instantly notice the reduction in your monthly rent. If you’re lucky, you can negotiate flat rates and prices with vendors. Cutting some costs will result in fast cash flow increase. Take a look at where you’re spending the most and cut it down.

Customer sales

Obviously, you always want to look for new ways to increase customer sales. Offer discounts on services and mark-downs on merchandise, if not for all customers then for repeat and loyal clients. Things like this create trust and strengthen relationships between people – the key success for a strong business is having loyal customers that come back every time.

Another thing you want to do is to stop your customers from paying you late. You can achieve this if you present them with different discounts if they pay for your service upfront. You may think that this will lose you money, but it actually won’t. It can just increase your cash flow and make your business even better than it is.


You should always try to prioritize paying up your debts if you feel like you’re falling behind on payments. Your bank account statement is going to be very helpful for you to check for any missed payments or unwanted accounts associated.

Once you conclude what’s the amount of money you need to handle your debt, you should contact your associates and try to negotiate agreeable payment terms. If you have lenders, try talking with them for a loan program that would allow you to pay back multiple loans with a single payment.

If you’re able, try to qualify for a hardship plan that has payment extension and lower interest rates feature. Keep in mind that you will probably have to write a hardship letter to your creditors to explain your current financial situation. Also, you’re going to show the proof that you really need their assistance in order to handle debt.

Some lenders and creditors may ask you to show these things:

  •       Bank account statements
  •       Current and previous tax returns
  •       Income statement and other financial statements

Ask for professional help

Another option you should definitely consider is getting advice from a debt-restructuring company. The professionals working in these companies are trained to negotiate with collection agencies and creditors instead of you while trying to formally change, renew, or extend existing credit agreements. This process the company will do for you will usually require a written contract between the company and you, but also your bank account statements.

Keep in mind that hiring a company like this will usually cost you a monthly fee, but it is better paying for a fee than going bankrupt. Here are some benefits you will enjoy if you decide to go for this option

  •       Reduced legal bills
  •       Reduced and extended monthly payments
  •       Credit improvement with on-time, consistent payments
  •       Less time spent negotiating and dealing with collection agencies and creditors

You should consider choosing a company that wants to work within the time and payment parameters set by creditors, if you choose to hire a professional company, of course. The company you hire will also be really thankful if you’re being honest with what you’re able to pay for each month.

Payment prioritization

Business debt can’t be handled overnight. Make sure you’re spending your money on the right things and on the right debt. Your priority should be a loan with the highest interest rate. It will take you longer to pay the debt, and you will also end up paying more, obviously. But, once you’re done with it you will regain so much control.


Handling debt is definitely crucial for every business owner. Not doing it in time will result in bankruptcy in the long run, so being responsible and paying everything in time is what you should stick to. If you think you are not able to handle debt by yourself, if you feel lost and confused, don’t hesitate to get help from a professional because that’s what they are for. You want to keep your business running and without any complications.


Adam Richards

About Adam Richards

Adam Richards is a semi-retired business professional originally from Bangor, Maine. He spent the majority of his career in sales and marketing where he rose to the marketing lead of a Fortune 1000 company. He then moved on to helping people as a career counselor that specifically helped bring families to self-sufficiency through finding them rewarding careers. He has now returned to Bangor for his retirement and spends his free time writing. This blog will be about everything he learned throughout his career. He'll write on career, workplace, education and technology issues as well as on trends, changes, and advice for the Maine job market and its employers.