In some circumstances, business debt can be a good thing. However, there are times when it can become a problem for small businesses.
When it starts to take over your finances and cause stress, it’s time to do something about it. If you have debt that is becoming unmanageable you should look at how you can reduce it. For instance, consider how you can improve cash flow and chase customer debts.
To start your business off on the way to minimising debts take a look at our five tips. The less money you owe, the more you’ll have to invest in the business.
One of the simplest ways of paying off debts is to increase the amount of money you’re making. There are a number of tactics you can employ to increase a business’ revenue.
You could use promotions to create interest and generate additional sales from existing or new customers. Marketing campaigns can draw in more people to the business. However, make sure you’re not discounting too heavily, as this can have the opposite effect on your revenue.
Increasing prices is another option for improving your revenue. This needs to be done in the right way, so as not to push existing customers away. It’s important to highlight the value of the services or products you provide. This way customers are more likely to pay the higher prices.
For businesses that are particularly stock heavy, selling off some of your existing goods can help to free up cash.
Speed up customer payments
Businesses will often have a large number of invoice debts from existing customers. Those who pay slowly or need chasing can have a significant impact on your cash flow. The most effective way of doing this is to shorten your payment terms.
Giving clients less time in the first place will help you to get paid sooner. Some customers will wait until the invoice is due or even overdue, so the longer you give them the longer it will take them to pay.
Chase unpaid invoices
When you’re looking to reduce your business debt, chasing up your own debts is essential. It’s important to have an effective process for recovering unpaid invoices or they can become overlooked.
Start by sending out reminders or statements as soon as the invoice is due. These can then be followed up by calls to chase late payments. You can also use a commercial debt recovery company who can help to recover the debt for you.
Understand your debts
Before you start paying off your commercial debts, it’s essential to understand how much each of them is costing. Start by sorting them out based on the interest rate and monthly payment. This helps you to focus on the ones with the highest interest rate, minimising the total cost to the business.
If increasing your revenue doesn’t help to tackle your debt problem, then you can look at reducing business expenses. For instance, is your office too large or could you cut down on utility costs? There’s also the option of selling off any equipment or assets you don’t really use. If it’s possible, look at splitting costs with other similar local businesses.
Commercial debt recovery
If you’re struggling to reduce your business debt, at CEA Limited we can help. Our expert team of debt recovery agents can chase up your unpaid invoices and recover your commercial debts. We have a low fee structure and can help you get the money you’re owed quickly.
Contact us today to discuss your requirements and see how you can boost your cash flow.