5 ways to manage company debt – an SME guide
Most companies fail simply because of poor management of their businesses. Some of the chief reasons most companies have failed and end up in big debts include: poor credit management, absence of money and using of business funds for personal use.
All this can be avoided if a company employs some of the following measures in its business:
Companies or businesses that don’t pay their workers in time are charged or penalised for such a behaviour. The best solution to avoid such a scenario is to discuss the salary date with your workers. If an agreement is reached, you change their contracts to a date that best suits your business.
Suppliers and business partners
Loyalty and professionalism are two important aspects that are highly considered by many businesses. Maintaining these two will help keep your business’ reputation on the top hence suppliers and business partners will stick around your business for a longer time.
Avoiding or dodging bills payment can negatively impact on your credit score. Not paying will also create affect the reputation of your business and also reduce the chances of you getting credit in the event that you apply for one in future.
You should also avoid paying your rentals lately and avoiding to do that you don’t mount more bills on the already existing ones. Outgoing costs such as rent and utility bills need to be paid to keep the lights on! And again, not paying these could affect your credit rating.
If you are conducting a business as a sole proprietor, you will be held personally accountable for debts, and creditors could try to take your assets. This is one good reason to form a corporation or limited liability company.
You should avoid having Credit cards as they bring high interest rates and mount on your debts. You should also avoid penalties or interest charges as these can pile up quickly.