Tips to Solve your short-term debts
Funding is key to any company to develop, sustain and grow over time, but to their scarcity, often entrepreneurs are forced into debt, if accumulate, create an important financial problem that can lead to financial bankruptcy.
Even the short term debts can choke your business and limit your actions. Therefore, it is very necessary to be prepared to face this kind of situation and reroute your finances. I have four tips to resolve them, and this can really help if you take it seriously.
1. Renegotiate debt
You can try to change the debt structure passing from short to long term to reduce the quota by renegotiating loans with banks, extending its duration, making capital increases or by borrowing long term loans to cancel part of the short-term debts that cause the situation.
2. Request a credit score
It is widely used by SMEs and professionals to solve specific problems of illiquidity. This is a short-term credit by the bank that offers you the agreed amount on a credit account and you can dispose of it depending on what you’re needing. Its main advantage is that the bank only charges you for the money used.
3. Manage customer and supplier payments
If the problem is a transient mismatch between receipts and payments, try to lengthen or shorten payments to providers charging customers.
4. Try negotiating with your creditors
NPL (Nonperforming Loan) is a serious problem for the banks, so they are mostly open to constructive dialogue to obtain a solution for both parties. You have to be very proactive, tell them how much you can pay and even out a plan.
Many banks will accept to refinance your debt at a lower interest rate than would normally apply for credit cards and may even consider doing a discount if you can make the payment in a single installment.