Time is usually of the essence when it comes to paying back commercial debts. In this post, we’ve put together 10 simple methods your business can follow for a swift repayment.
If you’re a business owner, you’ll be well aware that taking out commercial loans is often an essential way of helping to keep your enterprise afloat. However, when those loans start to escalate, your businesses’ debs could begin to spiral out of control.
For that reason, finding ways of swiftly repaying commercial debts is absolutely essential. If you aren’t able to quickly repay debts, or stick to an agreed repayment plan, there’s a chance that your business will be issued with a letter before action, or further court litigation.
If your business has debts to pay back and you need to make sure that they are swiftly dealt with, then the 10 tips in this post should come in handy!
10 Methods Your Business Can Use to Quickly Pay Back Debt
1. Set Up a Repayment Timeline
In most instances, there’s no quick fix that will immediately wipe off all of your debt. Instead, a much more sensible method of quickly and safely paying back debt is to set up a ‘repayment timeline’.
A timeline will allow your business to accurately keep track of what payments are owed to each of your creditors. This will ultimately help to prevent you from falling behind on payments. In the long run, this will allow your business to pay back debts on time and without any unhelpful delays.
2. Renegotiate the Terms of your Debt
If you’ve got a good professional relationship with your creditors, then it’s certainly worth renegotiating the terms of the debt with them. Even if these negotiations aren’t successful, there’s no harm in testing the waters and seeing what sort of arrangements you might be able to come to.
For example, you might see if you can negotiate a discount on the overall debt if you’re able to make early payments. This will see the debt paid back quickly, while also reducing the amount you have to pay in total.
3. Consolidate the Debt
Debt consolidation is where you take out a large, low-interest, loan which allows your business to pay off various other smaller business loans. Naturally, this helps to simplify your monthly finances, as the quantity of debts your business owes will be paid off and will carry a lower interest rate than many other loans.
It should be noted that debt consolidation shouldn’t be carried out without proper financial advice. It often works well for businesses with multiple small business loans or credit card debt, but it can often require collateral or personal guarantees that add additional risk.
4. Business Debt Refinancing
In the simplest terms, business debt refinancing is the same as debt consolidation, with the main exception being that it covers a single loan. In essence, it’s paying off one business loan with another that has a more affordable interest rate.
This provides you with more favourable repayment terms, which should allow your business to pay back the debt much quicker. It should also free up some capital so you can focus on other important matters.
5. Reduce Your Outgoings
Simple really. Reducing your businesses’ outgoings and general spending will allow you to focus on quickly and efficiently paying back your debts.
This isn’t to say that you need to make any dramatic changes to your business model, or even make difficult decisions like making staff redundant. Instead, it’s best to take a close look at the sort of outgoings that can be removed without having a dramatic effect. This might include reducing your office cleaning bill or temporarily not paying for sandwiches to be delivered to meetings.
6. Automate Debt Repayments
Want to make sure that you stay on top of your payments? Then automate your processes! If you don’t have an automated debt repayment process in place, it can be very easy to lose track of what is owed and to whom. This is especially true when your business has a number of different creditors.
If you set up an automatic transfer from your bank account, you can rest assured that the money is going exactly where it needs to.
7. Examine Your Profit Margins
How are your profit margins looking? If your business is only able to attract customers and clients with products or services that only yield low profit margins, then the chances of you being able to pay back a debt quickly are going to be significantly reduced.
It may be worth reassessing the sort of products you sell so you can focus on products that generate high levels of revenue over a short period of time. This will allow you to quickly pay back the debt.
8. Diversify Your Business Model
On that same note, why not revaluate your general business model? Are there any immediate gaps in the market you can temporarily take advantage of?
Even if you only want to make short-term changes to your business model, these could be vital in securing quick repayments of commercial debts.
9. Upsell Your Clients
If you’ve got a number of loyal clients who are only spending a small amount of money each month, have a go at trying to persuade them to increase their monthly spend. Of course, this is a balancing act – you don’t want to be too pushy as that have opposite effect – but a little bit of persuasion could go a long way.
10. Liquidate Assets
As a last-ditch effort to pay off a debt quickly, your business may have to consider liquidating assets. This will usually come in the form of disposable amenities belonging to the business – perhaps some unused office equipment or furniture.
Are You Looking to Pay Back a Commercial Debt Quickly?
As you can see there are plenty of different methods for improving your chances of being able to pay back a debt quickly. However, none of them are absolutely guaranteed to be appropriate for your businesses’ particular circumstances. So, it’s always advisable to take independent financial advice before you make a rash decision.
Have you got any more tips for paying back commercial debts quickly? If so, then feel free to leave suggestions in the comments below!
Photo 1 – Avery Evans
Photo 2 – Christopher Bill
Photo 3 – Michael Longmire
Read more on our wealth & skills Blog!