Fractional CFOs play a crucial role in balancing debt management with business expansion. By optimizing cash management, improving cost efficiency, managing debt strategically, and driving revenue growth, companies can reduce financial burdens while continuing to scale. A long-term, strategic approach to debt reduction ensures resilience, stability, and sustained success in any market condition. A ProCFO Partners fractional CFO can help your business thrive, nurturing a healthy growth rate while keeping debt in check. Contact us today to engage a financial leader and strengthen your future plans.
- No, debt restructuring is a preemptive approach to manage debt, while bankruptcy is a legal process that liquidates or reorganizes a business’s assets to pay creditors.
- One of the first things that business owners do when trying to manage their debt is take their personal money and put it into their business.
- A debt restructuring firm can negotiate with creditors to modify existing credit agreements, making it easier to manage financial obligations.
- Whether it’s credit card debt or bank loans, the interest rate on each can greatly inhibit your ability to effectively pay down the principal loan amount.
- While “debt” typically has a negative connotation, business debt isn’t always bad.
Or it may allow the business to invest in paid social media marketing that provides a profitable return on ad spend (ROAS). Falling behind on debt may have serious consequences so it’s important to try to find ways to get out of debt before your business runs out of options. Build business credit, monitor credit health, and accelerate growth — all with Nav Prime.
Liquidate Assets
If the disadvantages of a business debt consolidation loan outweigh the pros — or you can’t qualify for any business loan — these alternative debt relief strategies could help. As a business owner, you probably don’t need a study to tell you that expenses are increasing. If your debts (and their interest rates) are also rising, you could find relief with a business debt consolidation loan. Business balance transfer credit cards involve transferring the balances of existing business credit accounts onto a new credit card with a lower interest rate. As with consolidation loans, this can be an effective way to reduce the cost of your debts—especially if you qualify for a 0% APR introductory period. To take advantage of these benefits, you must repay the entire debt balance before the 0% interest period ends, and you may have to pay a balance transfer fee.
Available business debt consolidation tools
Get creative and generate additional revenue from your existing assets. Loopholes like these usually only apply to instalment loans and payments to vendors. Credit cards and lines of credit don’t have structures that make business debt reduction this advantageous. Knowing your loan terms can help you use extra cash strategically when you’re paying off debt. The goal is to set a deadline for fully paying off your debt, and marking debt repayment targets on the calendar.
A Viable Alternative For Small Business Owners Looking To Get Debt Relief
A debt management company will also negotiate repayment terms with your lenders to reduce or eliminate fees, penalties, and interest charges. A monthly payment structure will be set up so you can begin paying off your debts. Compared to loan restructuring, debt settlement is gentler on your credit score. Your debt settlement company can negotiate with your creditors to reduce your loan amount balances. It is possible to reduce your debts by a significant amount and pay off your loans faster. Many business owners are able to settle their accounts in as little as 24 months.
A Heiser-Klopp article emphasizes the importance of CFOs aligning financial strategies with business objectives to drive revenue growth. They highlight the role of CFOs in identifying opportunities for expansion, mergers, or partnerships, and in developing pricing strategies that balance profitability with market competitiveness. Reinvesting in strategic expansion ensures that businesses continue to grow while maintaining financial stability. A strong revenue-focused approach ensures that debt reduction does not come at the cost of future success. Unlike personal debt, business debt is often money you owe to those who supply the raw materials used to make or market your products. Needless to say, you can’t just skip town and run from your creditors.
How to compare business debt consolidation loans
These companies build an action plan and negotiate with your lenders to lower your interest rates and the amount of money you owe. One of the first things that business owners do when trying to manage their debt is take their personal money and put it into their business. Recognizing signs of financial distress is important because it can help you avoid falling deeper into the debt trap.
- The decline indicates a deterioration in the overall health of the Canadian retail credit market, reflecting declining consumer behaviours and weakening market conditions.
- Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like online applications, prequalification options and mobile apps.
- Consolidating loans where possible simplifies repayment schedules and reduces overall financial strain.
- Some customers praised the lender for its quick and straightforward lending process, while others complained of high interest rates and feeling misled about rates and fees.
- He credits his hard work ethic and positive life outlook to his parents, who taught him valuable lessons about being a great husband, dad and leader.
Consult your accountant or use accounting software to forecast the financial impact of cutting costs in different areas of your business. In 2018, Kim relocated to Charlotte from Sarasota, FL, where she spent four years working as the event coordinator for a wealth management firm. But her work experience hasn’t been limited to just financial services; in fact, you might describe her background as eclectic. “I have been a cosmetologist, cemetery manager, fire educator and fire instructor,” Kim said.
If your business is relatively large, this plan may involve selling off some of its non-core assets in order to satisfy your secured debts. For instance, you may be asked to sell some extra equipment that you don’t use or find buyers for some of the storefront locations that your company owns. In all likelihood, your business will exit the bankruptcy reorganization process as a smaller, leaner organization. The more cash you have on hand, the faster you can kill your business debt and pay down any lingering loans. Truth is, if generating extra revenue was that easy, businesses wouldn’t get into debt in the first place. With your budget and debt reduction strategy in place, you should be able to calculate when you’ll have paid off all of your debts (provided you stick to the plan, of course).
Find Other Ways to Increase Revenue
You may also be able to negotiate reduced prices and flat rates with certain vendors. For example, software providers often provide discounts for bills paid annually versus month-to-month. Figure out which expenses you can axe versus services that are necessary for the daily operation of your business.
According to Joe Camberato, a business loan consolidation can provide a lifeline for businesses juggling multiple payments. Combining everything into a single loan can help simplify your financial life. Kiah Treece is a small business owner and personal finance expert with experience in loans, business and personal finance, insurance and real estate. Her focus is on demystifying debt to help individuals and business owners take control of their finances. She has also been featured by Investopedia, Los Angeles Times, Money.com and other financial publications.