Debt can be a crippling problem for small businesses wanting to grow or just break-even during difficult times. By reducing debt you'll improve the value of your business, its financial situation, and its ability to continue operating into the future.

Assess your debt situation

Take a detailed look at all of your debts – both current and long term. Evaluate which ones are more urgent and which can be parked until some progress is made.

Also list your debts from smallest to largest. Maybe some of those smaller debts can be paid off quickly without much hassle to enable you to focus on the larger ones. Consider consolidating all your loans into one payment if possible.

Cut costs and free up cash

Try to cut any unnecessary costs and free up some cash in the process. Think about how much you spend on each of your daily expenses – is there room to cut some of those costs?

For example, building firm may shout takeaway coffees for its workers a few times a week. Maybe a cheaper way can be found to continue providing coffee, such as instant coffee on site with hot water from a thermos, rather than expensive takeaways.

Early payment discounts could work well but make it clear on each customer's invoice. Alternatively, tighten up invoice periods so there are less days for your debtors to pay before penalties. Make sure you let them know about any changes and the reasons for those changes.

Reassess funding

Have a look at how you're using funds to pay off your business's debt. Do you have funds available that could be better used to reduce debt further? Perhaps you have money in a current account that isn't being used optimally – lowering debt and hence future payable interest could be a wiser choice.

Sell your assets

Another option for freeing up funds to reduce your business's debt might be to sell some assets. What do you have money tied up in, but don't use often enough to justify?

Make sure you've calculated depreciation correctly

For example, a company vehicle will need to be accurately depreciated in relation to its usage over time. We can help you calculate depreciation correctly and also check whether you're entitled to any tax rebates.

We can help your business develop and implement a debt reduction plan. Contact us today to make an appointment to get started.