Unfortunately, we can’t plan for the unexpected. 2020’s events taught us that. But it’s not all doom and gloom. There are ways you can manage debts to get your business back on track. We wanted to cover a few things you can do to get your business out of the black.
Don’t wait for it to improve, take action now
Sometimes, it can be difficult to resist the urge to bury your head in the sand and hope for the best.
But when it comes to debt management, not facing it head on can lead to serious damage further down the line. Including loss of employees, seizure of stock, costly court cases brought by your creditors, and worst case scenario, risk of government intervention.
Cut costs where you can
Think about any unnecessary expenses and try to cut costs where you can. For example, if your business has taken a work from home approach, you may have unused office supplies and equipment. Instead of letting them gather dust, sell them to other businesses where you can. That way, not only are you helping your business, but you could be helping another business in the meantime.
You could also consider downsizing your office. Maybe your business is small enough to join a co-working space, for example. You might also be able to save on utility costs if you’re sharing with other businesses.
Cut costs sensibly
However, make sure you’re thinking carefully about where to cut your spending.
Don’t assume cutting costs will automatically save you money. It’s where and how you cut costs that matters. For example, if you slash your marketing budget you might save a lot of money in the short term, but you will lose potential new clients.
You can use accounts management software to forecast the financial fallout of different cuts in spending. Then you can make informed decisions based on the data. It’s all about trimming the fat out of your business, not the muscle.
Look at the bigger picture
Debt management is all about finding that balance between short-term and long-term solutions. While you need to do what you can to get out of the black, you also need to think about how you can avoid being back in this situation.
A good way to do that is to set aside a contingency budget in case of emergency. It’s always best to be ahead while you’re already ahead. By putting aside a portion of your business profits each month for the sole purpose of being a reserve, you’re insuring yourself against the inevitable ups and downs of being in business.
Keep an eye on your accounts
You should always be aware of your business’s financial situation. The best way to do that is through good accounting software. Good software will help you keep track of any outstanding debts and monthly payments, giving you time to nip things in the bud early on and prevent any long-term financial damage.
If you need help and advice on your accounts management, Numero has got you covered. Get in touch with us today and let’s see how we can help your business move forward.