The corporate world is drowning as the world recovers from the Covid-19 pandemic. It has taken many companies by storm. Even after laying off hundreds of employees, they are still struggling with debt.
Corporate debt is an issue and everyone knows it. The question is, what can you do about it? How to erase your debt and save your company? Do you have anything particular in mind? Any specific strategy?
If not, you’ve come to the right place. In this article today, I’m going to highlight some of the most effective debt management strategies to eliminate your company debt. So, let’s have a look:
Organize the Debt
First and foremost, you need to map out how much debt you have hanging on your head. Create a spreadsheet or simply take a journal and note down all your pending payments. Make sure to consider everything when creating the spreadsheet and keep it organized. Here’s what you need to do:
- Calculate the remaining amount of money
- Know the minimum and maximum debt payments
- Take the interest rate into account
- Note the due date
- Decide the mode of payment
With all these things in place, you’ll know what you need to do next. Such an exercise will simplify the process for you.
Cut Out on the Fluff
Sometimes, insignificant things can make a significant difference. Many little things in the office; for example, coffee, tea, Friday lunches, brownies, networking conferences, can affect your monthly company budget. Such expenses seem light on the pocket but when added to the monthly budget, they make quite a difference.
Cut down on all such nonessential expenses and create a budget instead. Start by calculating the money that comes in and goes out, including the salaries, office bills, and more. Spend only on things that are necessary and cut other things out. The money you save, you can direct to the debt payments.
Once you have your spendings under control, it’s time you move on to your debt repayment strategy. The best way to get rid of corporate debt is via debt consolidation. It involves paying your company debt through a consolidation loan.
In other words, debt consolidation is about refinancing your company debt through another loan. It is especially helpful if your debt comes with a high-interest rate. Paying it off using a lump-sum amount will save you from the interest fees, which makes it the best option. You can then repay the consolidation loan within the given time.
Renegotiate with Your Creditor
If you don’t want to take another loan to pay off your existing debt, talk to your creditor and renegotiate a deal. You can either talk to them about buying more time or ask them to cut off the interest fees. It will make things easier for you.
Either you can renegotiate with your creditor on your own or hire a third party to do it on your company’s behalf. However, they’re going to charge a lot, so it would be another expense. If you ask me; I suggest you renegotiate on your own as the idea is to save money here.
Go for Bankruptcy
In case nothing else works and your company is no longer in a position to pay off the debt, you should consider bankruptcy. Although declaring bankruptcy is a big step, it is the only way to take a fresh start.
It may break your company down, so it’s best if you lay off a few employees before you declare bankruptcy. Also, you must talk to your attorney before you make this decision. Having a professional opinion on the matter will surely be helpful.
Explore all the eggs in the basket before you make a decision. Remember that whatever you decide will not only affect you but your employees as well. Good luck!