Knowing that your business’s debt is piling up can be an excellent motivator to do something about it, but it can also feel too overwhelming to handle. Creating a debt reduction strategy can help business owners take back control of the situation, paying off business debt as promptly as possible.

Learn how to pay down debt fast with these business debt management tips below.

Ways You Can Pay Off Your Business Debt?

Create a Strict Monthly Budget

Even if a lender is willing to extend your loan term, that doesn’t mean that it’s the right decision for your business. Paying off debt in a shorter period will cost more on a monthly basis. Plus, the amount that you owe will be less, because there’s less time for the debt to accumulate.

Typically, the amount of new money you owe your lenders will eventually be greater than the amount you can earn by investing. While a reasonable ROI to expect on investment is under 10 percent, a typical business credit card may have an APR that’s upwards of 24 percent. This means that when you’re creating a monthly budget, debt should be considered one of your highest priorities.

Decrease Your Business’s Spending

To maintain your operations, there are expenses like payroll and rent that you must consistently afford. However, there are also costs that you can cut. For example, perhaps you pay for a weekly catered breakfast or use marketing services that aren’t generating leads. Until you pay off your debt, try cutting costs when you can to save money.

To monitor your spending, you should create a functioning budget on a line-by-line basis. When you do this, you should first review your loan’s interest rate. Then, assign an ROI value to every expense that isn’t necessary. If the item in question yields a lower ROI than your term loan’s APR, you should eliminate that expense

Renegotiate the terms of your loans

If you’ve fallen behind on your payments, don’t be afraid to pick up the phone and negotiate the terms of your loan.

Sending loans to collections represents a huge loss for lenders; the last thing lenders want to do is send a collections agency after you. Explain your financial situation and ask your lender if they can be flexible with late fees, restructuring payments, and even renegotiating your interest rate. A hardship letter may also help to support your negotiation efforts with creditors.

Consolidate your debt

Debt consolidation is where you take out one large, preferably low-interest loan to pay off several smaller business loans. This can simplify your monthly finances, and generally carries a lower interest rate than other loans. Watch out, though: many of these require collateral or personal guarantees that might add up to uncomfortable risk.

Have a Sale

Although you might be thinking now is the time you need to get top dollar for the goods or services you provide, you may be able to generate extra income toward your debts by having a sale.

If your business is in the service industry, offer incentives, such as a set amount that can be saved through increased business. However, if you sell products instead, mark them down and advertise a sale.

Belinda Rosenblum did this to help pay off her business debt in 2015 and it helped her generate enough revenue to pay off $10,000 of business debt in a few short months.

Ask for Referrals to Get Extra Clients

Offering your customers a discount for successful referrals is one way to generate new customers and increase your sales.

For instance, if you are able to cash in on any of the referrals they give you, give them a 10% discount on their own bill.

Consider Debt Consolidation

One other choice for you to consider is debt consolidation. Sometimes you can combine more than one business loan or credit card balance into a single loan. By doing this, you may be able to obtain a lower interest rate to help pay your debt off faster.

Carrie Smith, the founder of Careful Cents, is paying off a business debt she acquired a little over a year ago. She chose to consolidate her debt to save money and simplify her finances.

We have always emphasized the importance of having a good website for your company because it can act as your best tool for marketing and sales. A poorly designed website can repulse people from your business and can cause you to lose customers before you even have them. Get in touch with HyperEffects to work on creating, enhancing, and making the website of your company more user-friendly.