Businesses can find themselves under a pile of debt just as most individual consumers do.
However, your company’s debt can be a lot larger than your personal one, meaning that it will carry stricter terms of payment. Your company’s credit reputation is very valuable as an asset because it determines the amount of credit available to your company from lenders such as banks.
Credit availability usually influences your company’s ability to invest in equipment, buildings, and marketing campaigns as well as grow.
Here are some steps that you can take to grow your business:
Contact your creditors
You should get in touch with your creditors and ask them to alter your repayment options. If your company closes its doors forever or files for bankruptcy, your creditors know that they are likely to receive far less than you owe them. Due to this, your creditors might be willing to restructure your payment options and help you to avoid this outcome.
Creditors can help by suspending your accounts and allowing you to pay what you can afford at the end of each month until the debt is paid off. Other creditors might accept a settlement offer and close your account for a lump sum payment, which is lower than your actual payment. You need to speak to a higher-level manager if you want to negotiate a larger debt.
Moreover, you should not be afraid to offer creative solutions. For instance, you should find out whether your creditor is willing to retire your debt in exchange for a transfer of goods.
Create a time-bound plan for repayment
You can eliminate your debt by coming up with a time bound repayment plan. Once you have arranged with your creditors to have reasonable payment terms, you need to dedicate a certain portion of your monthly income to repaying any outstanding loan you might have. Focus on paying off the creditors you already have by siphoning money from your income to your debt, even if it affects your short-term profits and growth negatively.
Having a positive credit reputation is a lot more important than getting a short-term boost in profits because having credit availability will help your business to expand in the long-term.
Request creditors to report account closures
You should ask your creditors to report account closures to the agencies that handle credit ratings. Although creditors usually report account closures and repayments on their own, you need to be sure that your debt repayments are being reported. Such reports can improve your credit over time, which will affect your business in a positive manner.
Ask for signed account closure statements
Once your creditor closes an account, you should ask him to sign an account closure statement. Although it might take time for your rating regain its former glory, having a document that proves your debts are fully repaid can help you to secure a few financing options in the meantime.
After eliminating debt, borrow wisely
You should only take on the debt that you know you can pay back. Moreover, you need to keep your new debt paid down by making at least the minimum payment every month. Getting rid of your existing debt is a good first step; however, your business has to keep borrowing money to strengthen its credit rating over time.
Remember that borrowing money is not always a bad thing. A problem only appears when you borrow more than you can repay. You need to be careful when looking for a credit repair company. Just make sure that you read the reviews like Sky Blue credit repair reviews carefully.