The next company to go into liquidation or administration is only around the corner. This does not need to happen and can be avoided by seeking debt advice.
Debt is a taboo word and not something anyone likes to shout about and admitting to being in debt. By facing debt front on, this is the first major step to debt recovery.
Debt is something that is very easy to get into but very difficult to get rid of. Money can be spent within minutes but if only money can be replaced within minutes. Debt is something that businesses and people try to brush under the carpet and forget with the hope that it will be taken away. But debt as much as it can seem daunting and sometimes scary it can with some debt advice be put under control quite easily.
We look at some of the ways debt can be controlled instead of spiralling out of control:
1. Work out a budget
By working out what the income and expenses are, it can also show where money can be saved. A budget will help decide what can be easily afforded to repay creditors, while also being realistic.
2. Talk to your creditors
Instead of avoiding creditors, they can help in bringing debt down. Creditors are humans and are very aware that customers do face financial difficulties at some stages. Communication is key in negotiating with creditors. When discussing financial difficulties with a creditor a professional and calm manner at all times is key as well as keeping the creditor up to date on any progress. A couple of phone calls a month would be appreciated by the creditor.
3. Prioritise payments
Staring at the pile of bills can be overwhelming, giving the “where do I start” answer which can leave an individual with more undue stress.
Payments can be categorise into two ways, lowest bill through to highest or highest interest first. By putting the lowest bill first can mean that a few of the smaller bills can be paid very easily and therefore reduce the number of creditors and the higher bills can be negotiated with. Those with highest interest rates usually take the longest to pay off, as most money that is being paid is going towards interest and not reducing the debt.
Although these two methods are an excellent way to prioritise debt, it is important that important debts need to take priority. These are payments whereby action can be taken if not paid. Examples includes mortgage repayments, council tax, rent and utility bills.
For any company worried about carrying too much debt and facing difficulties in keeping up monthly repayments, most creditors will come to an agreement to pay less each month to ease the pressure. By being frank with creditors and confidence in keeping up the payments, there is help available.
There is plenty of debt advice by qualified companies that are readily available to discuss debt management plans and are unique for each circumstance.
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Mark Jefferson is a seasoned commercial finance professional with over 25 years’ experience in financial services, much of that spent providing funding to SMEs. Mark has worked with many other firms in a similar situation to yours. Call Mark on 0800 157 7355 and you can also follow him on Google+
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