Once an entrepreneur decides to finance his project, he needs to know about the ways to pay back his loan, rules followed for the same, time period by which the loan needs to be repaid and what would be the loss incurred if he is unable to repay the loan on time. This may drive someone crazy brooding over the negativities. So, on a positive note how to have the right debt management plan before progressing further that would eventually help in keeping the business out of debt.
- Firstly, it requires a bond between the firms in the situation of business to Business Debt Collection or third party commercial debt collection. Some places and countries have some requirement of licensing of the commercial collection agencies. In fact, this is followed in most countries.
- The best way rather the most rational way is a smooth management of receivables to avoid the need of any collection agencies.
- The problems mostly arise in third party commercial debt collection. There is a particular statute during which the debt needs to be paid back. But this doesn’t give debt collectors the authority to harass a business house in the event of failure to repay a loan amount. It varies from place to place but the average range is a time period of three to ten years.
- If there is a collection agency involved, the agency needs to be notified when a certain part of the debt had already been repaid or the entire amount has been repaid.
- You need to budget to stay out of debt. You need to analyze your cash flow and should have a clear picture of the time when there is an outflow of cash and the time of inflow of cash. This practice would highly help the small businesses in debt to always be ahead of time and have clear planning of repaying loan at the right time. to sum up, we can say that it helps in systematization of the repayment procedure and to stick to the statute specified.
- Punctuality of payment is quite important. The easiest way to do it is to pay the highest interest rate loan first and paying on time. Mostly the credit card loan incurs higher interest rates and this paid early lessens the task.
- The key to a happy business is communication. Just in case your statute period is about to be over and the rolling money also could not help you in repayment on time, you should talk to the lender or the financial institution which has lent you the money, explain them the situation and convince them to help.