Tenable Solutions Limited,
Unit 3 Thornes Office Park,
Monckton Road, Wakefield,
West Yorkshire
WF2 7AN

Tel: 0844 855 0 225
Fax: 0844 855 0 229

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Small Business Debts

Small businesses are easily exposed to high levels of debt, and they often do not have the huge assets or financial reputation that bigger companies can leverage in order to survive through difficult periods. As the owner of a small business, watching your finances spiral out of control can be all too easy. The smallest things can put your business in jeopardy, such as a client not paying his bill on completion of a project, or your supplier increasing their costs.

As soon as your expenditure increases, or your income takes a hit, debt can begin to build, and once it has begun to take hold, you better watch out. It may be the case that, like many others, you have been hit particularly hard by the financial crisis that has become a global problem; this is only a temporary problem (we assume), so many businesses are just trying to stay afloat and remain stable until the economy bounces back. If you are confident that in the future you will be able to pay back the debts that you owe, renegotiating the terms of your debt could be the way forward.

If you have a solid understanding of your finances, and good reasons for heading into the red, you can talk to your creditors openly about the problems you face. It is likely that the creditor has already met with other business owners who have been unable to pay their debts, and there is no shame in asking for help in order to secure the long term future of your business. The creditor should fully understand the situation you are in, and if they feel that you have a good enough plan of action in the future, they may well allow you to pay off your debt over a longer period of time, with smaller monthly payments.

One way of dealing with your creditors is to hire a professional firm to handle the process of renegotiating your debt. This firm will talk to you about your financial situation and assess the different aspects of your business; with this information they will then be able to talk to your creditors and could well persuade them to change the terms of your debt. Using a professional firm can bring with it more power when meeting with creditors and will certainly give your business a better chance of long term stability.

It is important to remember in these situations that your creditors are not interested in destroying your business. They are obviously extremely cautious about the money they have lent, but this in turn means they have a vested interest in your long term financial stability. Without your business, they will lose money from the interest you pay them, so it is sometimes just as important for them to agree a deal with you, as it is for you. On the other hand, if the creditor feels that you have the ability to pay back the debt in full, and they are not concerned about doing further business with you, they may simply demand that you pay back the debt according to the terms of the original agreement.

Insolvency or liquidation are not pleasant procedures, and they should really only be seen as a last resort if your business is truly unable to continue trading. Nearly every business goes through difficult financial periods; it is how they handle these periods that defines their long term success. A renegotiation may mean that you have a greater amount of debt overall since you are paying over a much longer period of time, but anything that can keep your business trading until you are able to carry on making profits is a step forward.

see also debt collection.

see also debt problems.

see also tenable debt collection.

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