4 Tips How To Get Out Of Debt

Last week I wrote over 500,000 of SME's in the UK are in serious financial distress, if you are one of these then you are not alone.

Here are some simple tips to try if your business is in debt.

1. Where can you cut costs - BE RUTHLESS!!!

The first place that I would start is where can you cut costs. Go through your P & L line by line and see where you can cut costs ASAP.

Can you make savings with suppliers, can you renegotiate items to save some money.

Are there any expenses on there that are no longer necessary, if you haven't used it in 6 months do you really need it at all?

1. Talk to the creditors of your company

Literally picking the phone up to your creditors and having an open and honest conversation can go along way and I promise that it will make you feel better instantly. Like I said before you are not alone and it's highly likely that the creditor will understand and they may be in the same position as you at the moment. There is nothing worse when your chasing money and the person doesn't respond, they bury their head in. the sand thinking the problem will go away.... sound familiar? It's important to hit this head-on and explain your situation to the people that you owe money to. Most of your creditors will be willing to help you with a payment plan, from their point of view getting something of you and understand your position is better than nothing and having to go to the added cost of sending legal letters to recover the debt.

Most enforcement action is taken by creditors because they have heard nothing from you and have no other option!

Remember if you are negotiating a new payment plan make sure that you can keep up with the terms, you will lose any credibility if you fail to keep up repayments.

If you have literally no money then that is the conversation that you have, you promise to keep the creditor i the loop and check in with them next month or sooner if something changes.

3.Prioritise Whom You Pay!

Your biggest priority needs to be the debt that is accruing the highest rate of interest and also who is likely to start enforcement action first. This plate spinning canty continue indefinitely but if it's a short-term solution sometimes you have to rob peter to pay paul.

Also be aware of what debts that you have personally guaranteed, if the company fails then you are going to be on the line for that debt personally! Company overdraft, credit card, loans, and some suppliers will have asked you to sign a personal guarantee before they extended you the credit. If you are unsure what you have PGs ask to see a copy of your original agreement.

When prioritising who you pay you need to be careful of making preferential payments.

If your company is insolvent then showing a preference to one creditor over another can land you in hot water. If you truly believe that this is a short-term problem then juggling creditor payments is a means to an end, if your not sure which fits your case and you want some objective advice get in touch with me.

It's mega important that if you don't think your company is going to survive what it's going through then you need to tread very carefully. If you go into an insolvency procedure any preferential payments could land you with being made personally liable for company debts and you don't want that.

1. GET SOME PROFESSIONAL ADVICE.

Insolvency can be a minefield, believe me, I know because I was where you are a number of years ago. The earlier you seek professional advice the more options that you have available and the better the outcome will be. If you are confused about the above or if your appeal to creditors has called on deaf ears then it may be time to get specialist insolvency advice.

Don't suffer in silence with this hanging around your neck, if you want some free, independent, no obligation, and no-strings advice get in touch with me today.