Wednesday, August 13, 2014, AM | Leave Comment
With a record breaking recession continuing its dismal course year after year, creditors have had an increasing number of defaults and are reacting by tightening their grip on their borrowers. Large companies, small businesses, and individuals have all felt the pressure of the drastic financial landscape shift making bankruptcies and liquidations an unsettlingly common occurrence.
Loans that were taken out during better financial days are now crushing businesses who are suffering from poorer sales and lower customer acquisition rates in the ever unforgiving and fluctuating economic recession.
While, for many struggling companies, bankruptcy and liquidation seem to be the only viable option, there are a number of different paths that can be taken in attempt to save your company.
Bankruptcy itself is not an easy or inexpensive solution. Attorney and court fees can cost as much as $10,000, which says nothing of the hit taken to the credit scores of the businesses and owners alike. So when you’ve found your company overwhelmed with debt without any obvious way out in sight, what alternatives do you have?
In fact, there are a handful of tricks you may still have up your sleeve without even realizing it. First and foremost, you can find and eliminate unnecessary expenditures within your company.
If you’re company has been dealing with debt for some time, it’s almost certain you’ve started down this path before.
However, it’s not uncommon to overlook smaller excesses that can add up to a fatal amount of cash flow bleeding from the company.
If you’ve already taken care of known excessive spending, then you’ve taken an important step. Now it’s time to scour each department, go over receipts, tax returns, etc. and mark any and all excess spending as small and insignificant as it may seem.
When all is said and done, you may be delightfully surprised at how much money you can save your company by eliminating completely superfluous spending excesses that you were previously unaware of.
This can and should be taken to the level of removing unnecessary services and office space, and selling off unused equipment or scrap materials.
This is also a good time to take the same course of action that has put so much pressure on you to begin with – increase your collections effort.
The next step to consider is revamping your company’s budget. This could easily fall into the category of cutting unnecessary expenses, but should be given a great deal of attention all on its own.
In a lot of cases of business lacking the funds to pay their debts, the company is still operating under a budget that was set down during better financial times. This can lead to catastrophic results.
If you’re not able to pay your bills on time and the debt continues to accumulate, it means that you are taking in less money than is necessary for your business to operate in the way it is currently designed to.
You need to determine what your company can afford and where the money that the business is currently bringing in should be going.
The doom and gloom mentality that is usually associated with a debt-ridden company can be one of the most counterproductive forces in this process.
Instead of looking at the situation fatalistically, consider simply that times have changed and so must the company. In a way, this type of change is a kind of company growth.
By successfully reassigning funds and reevaluating the company’s financial situation, the company becomes more flexible – an asset in the modern ever-changing marketplace.
At this point, you may be surprised at how much cash can be freed up. Now it’s time to prioritize the company’s debt payments.
Whether currently apparent or not, the debts of a company will automatically fall into a hierarchy of importance. Sometimes this is a result of obvious factors and sometimes not.
The most obvious debts to put at high priority are the ones with higher interest rates.
On the other side of things, if a creditor has the ability to come after your company’s assets in the event of a default, that debt should be seen as a higher priority.
Other strategic reasons can sometimes come into play here. It’s always a good idea seek outside assistance in this process.Facebook.com/doable.finance