Debt and cash flow Management

Always a concern for all business owners, even more so given the ongoing pandemic and increasingly difficult time.

Here are a few general pointers for business owners to consider:

Assess your debt -

Get a clear understanding of the level of debt you are carrying, then calculate and analyse your debt-to-income ratio. This will demonstrate if you have enough working capital to continue servicing the debt and enable you to put a debt re-payment programme in place. Paying off your most expensive debt should be a priority!

Increase cash flow -

Recover overdue payments and put processes in place to manage the collection of your debtors. Consider what non-essential expenditure can be reduced or avoided now. Also look at what's costing you the most and review your options. For example, ask yourself if your expensive office space is really necessary or could you downsize with some degree of home working likely to continue next year.

Review your company assets -

Are you making the most of your business assets, there are a number of options available if the business has unencumbered assets, invoice finance, asset finance, and stock finance are all possibilities to ease potential cash flow issues, and there are also Government loans still available.

Renegotiate payment terms -

With landlords, suppliers and your bank, should you be concerned about meeting any loan commitments.

Consolidate loans -

Consolidating debt into a single low-interest is one of the fastest ways to lower your interest rates and pay down your debt quickly.

Establish sound financial planning, monitoring and evaluation -

Budgeting, forecasting and management reporting are also really important when it comes to managing cash flow and paying off your debt.

Ask for help -

Initially speak to your Accountant who will be able to discuss various solutions with you.