The first step business owners should do in order to address increasing debt and become debt-free is to choose a debt repayment plan.
Debt repayment is a process of paying off the principal debt balance on a loan over a certain period of time. Read on to know more about effectively proceeding with the debt repayment process.
List all debts
Listing all outstanding debts, including balances and interest rates, will help in understanding debt levels. Rank and prioritise debts
Rank debts in order of priority after completing the list of debts. Decide which to prioritise by identifying those that need to paid off immediately: prioritising according to interest rate or the amount owed.
Business owners could also ask and negotiate with creditors and lenders about payment holiday options or renegotiate interest rates and freezing interest payments.
Pay off debts in order of priority
Debt repayment plan should fits the business’s needs and the demands/requirements of its creditors.
Debt repayment schemes must be strictly adhered to while focusing on topping-up savings.
Business owners should also identify if their current business assets—physical instruments, equipment, or tools—are unnecessary. These unnecessary assets can be sold with their earnings directly placed on savings.
There are several debt repayment options to choose from. However, remember that simpler and systematic plans have a better chance of succeeding.