4 Financial Tips to Lower Your Debt When Running a Small Business

2 min read • Nov 22, 2017 • Balancing Books Bookkeeping

Managing debt and financial obligations is top-of-mind for every small business owner. While you want to minimize your expenses and liabilities, you also need working capital in order to maximize your assets and income. Here are some tips to help you lower your deficit and stabilize your finances while at the same time, growing your business:

  1. Draw a better picture of your debt.
  • Make sure all transactions like the inflow and outflow of cash are well recorded. Understanding your cash flow will help you better determine a timeline for paying off your debt.
  • Consider consulting an accountant to help provide an expert assessment and a third-party perspective of the financial status of your company.
  • Once you determine your total debt, account for the expenses you allocate for on a monthly basis.
  1. Be strategic about debt reduction.
  • Have a plan. Once you have identified the total amount of debt you want to pay off, make a critical expense plan. This will allow you to create necessary adjustments in your monthly spending that will help you attain your goal.
  • Set an income target wherein, a percentage of which is intended for debt payment. Or, specify an income strategy wherein, the income of a particular line, for example, is dedicated to the debt payment.
  • If your monthly income is fluctuating or variable, you may need to adjust your strategy on a regular basis.
  1. Find a way to increase income or sales and decrease expenses.
  • Work on your marketing strategies to set prices that can boost your sales, keep customers coming back, and capture new ones.
  • You can also think of diversifying your business with new products or modifying your current products or services.
  • Inform your customers when price changes take effect. This encourages additional orders and extra revenue for you.
  • Make sure that your operating costs are adequately monitored. Having an accurate picture of your daily costs allows you to scale back in the areas that will impact your bottom line the most.
  1. Explore debt reconstruction.
  • Review your loan terms. A surplus payment can significantly help reduce your load, but check first if there are any fees associated with paying early.
  • Talk to your lenders. You may be able to negotiate with suppliers or creditors. Ask for a discount for early payments or negotiate some of the terms of your debt.
  • Consider consolidating loans. If you have several, you may be able to combine them into a lower-interest loan with only one creditor instead of several.







Karen Watson, Balancing Books Bookkeeping

Karen is a professional bookkeeper who loves numbers and her job. She currently works for Balancing Books Bookkeeping. In her spare time, she enjoys spending time with her husband, traveling, and reading.