Small businesses and debt
If you are a self-employed person, then you very well realize the importance of credit– it helps you get your business started, and also to expand it. But taking loans means there is a repayment factor and sometimes, the numerous loans are not easy to tackle. In the past year, consumer credit, or non-mortgage loans to individuals rose $4.4 billion, or 2.5 percent at an annual rate, to $2.174 trillion. While these figures may seem just that — figures — they hide the story of a growing number of people who are deep in debt and find it difficult to repay their loans. When your loans become larger than your repayment capacity, it could create a dangerous situation for any business because as every small businessman knows, cashflow problems have sounded the death knell for many a small business.
Some simple methods of improving cashflow include meeting your own debtors. If you need to repay your creditors, your debtors must pay you first. Meet people who are using your services on credit. Discuss with them modes of repayment, including installments and deadlines. This exercise will also help you weed out the bad debts. It will also give you an idea of how much of your finances you can expect to get back.
One very important thing is to keep paying for services like utility bills, water rates, rent. This will help you convince your creditors that you mean business and that you plan to honor your debts and repay all the loans. And if necessary, go in for some expert help and, possibly, even counseling. Some of the better-known counseling services include the ones offered by the Consumer Credit Counseling Service, Business Debtline, and The Bankruptcy Association.