How to prevent business debt becoming a problem
Business Debt
In today's commercial environment, it's increasingly common for small businesses to seek personal-guarantee insurance when taking out a loan. These policies protect small-business owners from being left with significant debts if their company is unable to make repayments. Purbeck Insurance Services has seen a 23% rise in the sale of these policies during the first six months of 2019. However, insurance isn't the only way to protect yourself against the risk of small business debt.
Control your cash flow
The key to preventing debt from becoming a problem is maintaining a steady cash flow. Although this isn’t something you can always control, there are ways to improve your odds of weathering an economic storm.
Clear, constructive payment terms are an excellent place to start. Clauses that offer clients a discount for prompt payment, for example, incentivise quick settlement; while clearly stating your right to charge interest on late payments will help discourage slow responses and ensure you're compensated if you have to wait.
Be ready to respond
If clients miss payment deadlines, don’t wait to act. Send a polite reminder or make a phone call to remind them of your invoice, reiterating your payment policies.
While you wait for a response, you can start researching debt collection services and other ways to recoup funds before you fall into debt. Giving yourself time will ensure you partner with the right Enforcement Agency for your business.
Know your options
If business debt starts to mount, it’s time to consider your options. Many small businesses have struggled to obtain loans from High Street banks when trouble hits, but there are alternatives. New models such as peer-to-peer lenders or invoice financing can provide access to much-needed cash.
When you're owed money by clients or other debtors, Enforcement Agents such as Dukes Bailiffs have debt collection services specifically tailored for small businesses looking to recover funds. These range from tracking absconded debtors to arranging manageable repayment plans or – in some cases – obtaining access to premises and recovering the funds through repossession.
Partnering with an Enforcement Agent before you run into trouble will ensure you have the systems in place to act if it becomes necessary. So if you’re worried about small business debt and want to explore your options, contact Dukes to find out how we can help.
