After this COVID-19 pandemic , a lot of businesses—small, medium, and large—will close. Experts have already concluded that thousands of businesses will close their doors. Millions of employees will be displaced. This is especially true for businesses that are now in debt. How can they pay their business debts if they cannot open their stores and make a profit?
If you don’t want a commercial bailiff to start knocking on your doors and embarrassing you in front of your clients and employees, you should start managing your debts right now. You begin that by taking stock of your expenses and how much you are earning. You will learn a lot about your company by looking at the things that you’re spending on.
Free up Cash
Ditch unnecessary expenses. Forego that office equipment you don’t need. Sell the office furniture you haven’t used in the past year. If you have a large office space, why not consider downsizing? Do you need everyone in the office? Should you allow your employees to work from home? That way, you won’t need to accommodate anyone in the office. You can even downgrade your bandwidth if you have only a handful of employees in the office.
Ramp up Your Collection Efforts
Are there clients who haven’t paid their dues to you yet? Chances are that your business is suffering because you haven’t collected the money from the products you provided and the services you rendered. Consider making a more solid contract that will fine clients who don’t pay on time. Make sure to remind your clients that they need to pay on schedule because your business is suffering from the delay in their payments. If they respect you as a business, they should pay on time.
Revisit the Budget
What are the expenses that you can cut down? Do you need cable TV in the office? Compute how much you are earning and how much of this is going to your expenses. You need to be smart about your business overhead such as the rent, wages, insurance, equipment, and supplies. You can pay off your debts if you tweak the budget a little bit.
Consider Restructuring the Debt
If the debt can be restructured, talk with the bank and get a quotation. Start to consider how to restructure the debt so that you can pay it off slowly but steadily. If there’s a big chance your debts are going to sink your business, look at how you can pay off the debts even if you’re barely making a profit for yourself. You should consider sacrificing your earnings as long as you’re paying all you need to keep the business afloat. Hopefully, with enough time, you’ll find a better strategy to boost your profits.
If you are unsure about where you stand credit-wise, talk to an attorney and accountant. They can explain in detail what you need to do to get your business out of debt. A well-managed business should dig a solution out. Focus on finding that solution rather than becoming overwhelmed by the problem.