Whether you are the head of a large corporation or a small business, financial issues are a daunting and major thing to look out for and to try to avoid. Financial issues can occur for a number of reasons, some preventable, and others not so much. In fact, sometimes businesses find themselves in financial trouble that is no fault of their own; this financial trouble can have a major impact on the future of the business, in some unfortunate cases, even causing bankruptcy or a business closure.
A Philadelphia bankruptcy attorney commented that businesses that find themselves struggling may have no other option but to file for bankruptcy if they are unable to pay debts or employees; however, he added, that there are some ways to get your business out of financial trouble before bankruptcy becomes the only option.
Get Your Business Back on Its Feet
Before it’s too late, there are some things that business owners can do in order to try to get out of financial trouble.
Prioritize Debts and Manage Late Payments
Debt is, unfortunately, a very common aspect of the business world. In order to start a business, oftentimes the owner has to take out loans; this is acceptable and normal, however, in order to avoid/get out of financial trouble, it’s crucial that you prioritize debts. Business owners should try to pay back secured debts, debts that are backed with collateral, first; this will void the possibility of losing personal items such as a building, home, or car if the business were to go under. Next, when paying back unsecured debt, make sure to try to make small payments every month to each, especially the ones with a high-interest rate.
On the other side of the spectrum of debt,make sure anyone that owes you money is paying you in a timely manner. If clients that borrowed money from you and have not paid you back, this could impact cash flow and ultimately affect your business. Make sure to reach out and remind clients of late payments that are due.
Develop a Relationship with Your Creditors
The simple act of reaching out to your creditors can get you out of financial trouble fast. Overall, creditors are interested in getting paid back, if you are having a hard time paying them what you owe, communicate with your creditor to explore options as to what you can do. Often times, the creditor will be able to create an agreement with you and that will give you some leeway in terms of paying back your debts.
Boost Cashflow
Boosting cash flow can help any struggling business. Invoice finance is one possible solution to boost cash flow for businesses that have unpaid invoices. This will allow a business to get an advance on unpaid invoices. Similarly, some companies will give a business a cash injection before collecting the invoice; these cash injections can give up to 90% of the invoice’s value.
Another possible solution to boost cashflow, especially appropriate for commercial businesses, is to finance or refinance equipment. Damaged or outdated assets are expensive to replace, but are necessary to get a job done; if your business is dependent on a machine and your business will get into financial trouble if you replace them, asset financing is a great option. Asset finance will allow the business to purchase a certain asset over a prolonged period of time. Financing assets will void the disruption of cash flow.
If your business’ assets are in good shape but you are entering financial trouble, refinance is a great solution. Refinancing assets will allow you to borrow money that is based on the value of current assets.
Prevent and Get Out of Financial Hardships Within Your Business
If your business is beginning to find itself in financial trouble, it’s important to be as proactive as possible by taking appropriate precautions and measures. Keep these tips in mind and always attempt to keep records and plan accordingly to avoid any potential financial issues down the line.
