To speed up the debt repayment process, understand that the things listed below must be attended to by order of priority:
List down all debts, including their balances and interest rates
Make a list of all debts with their balances and interest rates for a comprehensive grasp of your debt levels.
You can organise the list by formatting it via spreadsheet with columns assigned for names of creditors, minimum payment amounts, repayment frequencies (weekly, monthly, quarterly), interest rates, and total debt. Column headings should look like this:
- Creditor minimum payment
- Repayment frequency
- Interest rate
- Total debt
Rank your debts
Prioritise debts upon the completion of the spreadsheet. Which debt(s) need to be repaid immediately? Most will use the logic of prioritising the largest to smallest amount owed, or by prioritising the highest to lowest interest rate.
However, make sure to consider other options with creditors, such as asking creditors for a payment holiday or to freeze interest payments, to determine a debt prioritisation plan.
Pay off debts in order of priority
Paying off one’s debts can start after deciding on a repayment plan which fits the business owner’s needs and satisfies the creditor’s requirements. This can be done according to the established debt repayment prioritisation scheme.
Sell what can be sold
Business owners could sell unnecessary assets. Money from the sales can be used to pay debts.
Figure out what you need and what you don’t and list down the necessities over the course of a given week. Auxiliary equipment and tools can be purchased once the business regains its good credit standing again.
Strengthen your savings
After clearing debt, business owners can focus on strengthening savings. This means spending only on the necessities of the business while the remainder of the business income goes straight to a savings account.
