Debt Management

--------------------------------------------------------------------------------
Overview

Assessing your debt

Minimizing debt

Short-term vs. long-term loans
Growing your business can demand considerable capital, and getting that money may require you to seek a bank loan, personal loan, a revolving line of credit, trade credit or some other form of debt financing.
Debt is a good idea if you need to improve or protect your cash flow or if you need to finance growth or expansion. Common reasons for seeking a loan can include need of working capital, expanding into new markets and improving cash flow.

But, it is important to maintain a manageable level of debt. Before taking out a loan or any other kind of debt, you should spend time planning your capital needs by reviewing your balance sheet to help you analyze cash flow, assets and liabilities. Since cash flow and debt load are two inseparable items, you must aim to manage your cash flow to minimize debt load. Make certain, however, that in borrowing relative to your cash flow, you leave enough money to run and grow the business.

Also, make sure you take out the right kind of loan. Taking out a short-term loan when a longer term loan is required can quickly create financial troubles. Always use short-term loans for short-term needs.

--------------------------------------------------------------------------------
Getting Out of Debt If you are already in trouble with debt, experts suggest to stop borrowing and instead look into a bank loan or a line of credit. Other tips include asking suppliers for credit if you need temporary equipment or supplies, focusing efforts on increasing sales, collecting receivables and reducing operating expenses, expanding product lines and working closely with your banker. Seeking help from an advisor can be quite beneficial, especially if you find that your income will not rise to meet your expenses.