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Use these three simple steps to manage your company debt payments

by , 16 April 2014
Debt can destroy your business if you don't manage it properly. And all because it ultimately leads to insolvency. Don't let this happen to your business. If you manage your debt payments properly, you'll be able to set-up a structure that makes the process less scary. And you can do it, in just three simple steps...

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The three steps to better debt management
 
There's a certain element of gambling when you take out credit. You never really know what's going to happen, but you have to make sure you can make your payments. 
 
Although this can become a problem when financial difficulty strikes your company, if your payment plan is well structured you'll be fine. Here are some steps to structuring your payment plan.
 
1. Before getting into debt, ensure you have adequate finances. You want to know that you'll have enough money to cover your monthly payments. 
 
2. Don't take out more credit than your company can afford to pay back. It's not a good idea to owe more than three creditors/organisations at a time.
 
3. Set aside a specific amount each month that's dedicated for debt pay. Don't use this money for anything else and don't decrease this money. Work on the minimum your company can afford to pay each month. You can increase but never decrease it below that minimum mark. This way, you'll always have enough money available to make your company's payments. 
 
Sorted suggests their own four steps for managing debt:
 
- First: Ask yourself if your company really needs it (is this worth getting into debt for)
- Second: Borrow money to buy assets.
- Third: Save money to pay for expenses 
- Forth: Don't take advice from the person lending your company money. The more in debt your company is, the better it is for him. 
 
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The number one thing to avoid when paying off company debt
 
According to Dave Ramsey there's one thing you have to avoid when paying off company debt. That's using debt settlement companies. A debt management company will help you pay off your company's debt, but at a price. Your company's credit record will be shot. Even if the business is doing well, you'll struggle to find anyone to lend you money. 
 
So to manage your debt payments better, do it yourself, with careful planning and structures to clear your debt.
 


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