Steps to effectively manage your debt

Small Business

20 Nov

Loan and credit card repayments are usually a significant portion of monthly cash requirements of a small business.

So, it is extremely important to know the level of debt you have and the monthly repayments required to cover that debt. This needs to be considered when calculating revenue targets and the impact this has on your business cashflow.

Ongoing honest communications with your lender can mean that they are aware of any circumstances that positively or negatively impact available cash and they may be able to assist with timing issues as they arise.

“Ongoing honest communications with your lender can often result in flexibility when cashflow issues arise.”

**Michelle Tucker**
Small Business Financial Counsellor,
Mackay and surrounding regions

How can this approach help?

Some of the clients I have worked with have engaged with the financial hardship teams within the lending institutions to have their repayments reorganised so that during economic downturns or other impacts they are still able keep their house which is usually the only asset that can be used for security even though they can’t currently make full repayments for a period of time.

Working with a Small Business Financial Counsellor (SBFC) to develop a realistic, multi-year cashflow spreadsheet can assist with understanding what actions are required to make the business financially viable so that it can make loan repayments and meet all the other on going costs of the business.

This may avoid the need for pay day or short term lending that attracts extremely high interest rates and high monthly repayments which negatively impact monthly cash availability.