Business Credit Issues

Negotiating a payment plan with your existing creditors is an excellent step in the right direction. However, unless you examine and address the underlying business issues that got you into financial distress in the first place, the chances are you will find yourself right back in the same mess all over again if you do not take steps to avoid these issues in the future.

Unfortunately, there are many issues than can negatively impact the success of your business that are beyond your control. Natural disasters, health issues with key employees, and unexplainable problems with suppliers can make it challenging for you to achieve your desired level of sales. However, cash flow is typically the number one problem that causes businesses to run into financial trouble. Cash flow problems must be addressed if the overall health of the company is going to be restored. The three main causes for cash flow problems are:

• Low Sales: No matter how hard you work, it you aren’t bringing in enough revenue to pay your expenses, you are going to run into trouble. It is critical that you make sure you are selling enough of your product at a price that is high enough to cover your expenses and generate a profit.
• Difficulty Collecting on Receivables: Making the sales is only the first part of a successful business. If you do not receive the payments from your customers on time, or if the payments you receive are less than you agreed to, these issues can seriously impact your ability to pay your obligations in a timely manner.
• Undercapitalization: Many small companies run into trouble when they accumulate too much debt and can no longer afford to make the required payments.

If any of these issues are contributing to your negative financial situation, you need to address them in a thoughtful and thorough way. Like fixing problems with your business credit, there is no quick solution. You may even want to consider hiring an outside firm to assist you in solving some of these problems. Working closely with an accountant who specializes in small companies can be very beneficial. Other types of consultants can also positively impact your business choices. Hiring a sales training consultant, for example, can result in significant improvements if you find that you or your staff lacks sales skills.