Ways to manage your business debt

Business owners find that one of the most crucial aspects of running their business is their ability to manage their debt. The ability to do this successfully becomes a key factor in helping to determine whether your business is able to grow in the long term, or quickly becomes one of the majority of failed businesses. Managing business debt becomes even more difficult for small business owners, who may be facing a number of challenges. These can include such items as:holding too much inventory or account receivables, both of which can send a business's cash flow into the red. It is important to understand that despite a difficult economy (and various other challenges), by identifying the areas where you can reduce costs and increase revenue; you can begin managing debt more efficiently. Here are some ways to manage your business debt-

• Set up a meeting with your banker-One of the first steps you should take is to meet with your banker.It is important to remember that your banker can be a great resource, for ideas to help your business. You should familiarize your banker, with your line of business, and discuss your ideas, and your financial goals or concerns, with him. This way once your banker becomes familiar with your business and industry, he can then facilitate introductions to vendors, suppliers, or other contacts, that may complement your business. Keep in mind that it is in your banker's best interest, for you to succeed. If your business fails, his bank takes a hit as well. If your banker is unable to help you, you should also consult with your accountant or trusted financial advisor, for possible debt reduction and debt management strategies.
• Always know the current interest rates-This is important since interest rates change quickly. Keep in mind that if the interest rate on your small-business loan is significantly higher than current rates, you should consider refinancing to obtain a loan, with lower monthly payments. If you do find a lower interest rate and want to refinance, make sure to review your credit report, to make sure there are no blemishes. Keep in mind that a higher credit score is an indication, of successful financial management.
• Think outside of the box-Physical space is usually a huge cost, for most business. Maintaining to much space or the wrong space can be big drain on your business' finances. You should consider subleasing unused space, if you are not using all of your square footage.You should also consider downsizing on space to lower your rent. Physical space is generally one of the highest expenses, for most businesses, and if you can reduce it you can better control your debt.
• Talk to your vendors-You should not hesitate to ask suppliers for discounts. This is especially helpful if you order in bulk. You should consider partnering with other business owners in order to make bulk purchases at lower prices.Be sure to use your good payment history, or quotes from other suppliers, when negotiating flexible or extended payment terms, with suppliers.
• Clear up your accounts receivables-While these type of accounts are not typically debt, they are a drag on the business finances. Having to many accounts receivables limits you in being able to get rid of other business debt. Work to streamline the billing process and get cash flowing in. This is important since often times, poor cash flow leads to mounting debts, for businesses.
• Control employee spending-If your employees are in charge of purchasing a tight rein may be needed. It is crucial to make sure that employees are accountable for all company spending. Using employee credit cards, or purchase orders are crucial to maintaining healthy spending and preventing the accumulation of business debt.