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Step one: Work it out.
Sit down and work out how exactly how much you owe and who you owe it to. Gather the latest bills from all Debt accounts.
Find the minimum monthly payment for each account and then add these up to get an overall monthly minimum. Pledge to pay this overall minimum PLUS an additional chunk every month -- enough to make a good dent in the outstanding balance of at least one account.
Next, order the latest bills according to annual interest rate charged. Apply the " additional chunk" (beyond the minimum) to the highest rate account(s).
Step two: Create your Budget.
Once you know how much you owe you can draw up a budget, including a schedule for repaying your debts. Be realistic and work out what you can afford to repay and still stay within your budget.
Do this by setting up a simple spreadsheet. In one column, list your monthly bills (rent or mortgage, auto payments, utilities, cable, etc.) — everything that is a regular monthly expense.
Then list variable expenses (things that change every month) like salaries, gas, etc.
In the second column, put down the amounts for each. Be sure to put enough for things like gas and salaries, as you don’t want to be short. Be sure to also include your minimum debt payments and your emergency fund deposit.
Now, list your income sources and monthly amounts.
Now You’ve got a temporary spending plan (you’ll want to add the irregular expenses later).
If the business expenses are greater than the income, you’ll need to make adjustments until the expenses are equal to or less than the income.
Step three: Have discipline.
Don't borrow any more money or take on any more debts until you have repaid what you already owe.
Pay bills on time. This may be a problem for a lot of small business. It’s important, if you want to get out of debt, to start paying all your bills on time. At this point, you want to focus on getting those bills paid on time, and making it a habit. If you have trouble remembering, try one of these methods:
pay bills as soon as they come in — take them to the computer and pay them online, or write out a check and prepare the envelope to be mailed the next day.
set up a reminder in your calendar program to tell you when bills are due.
Step four: Watch your daily spending.
If you find it hard to keep track of your business spending and ensure that you’re sticking to your spending plan. Here’s the key:
Take a set amount of money out of the bank at the beginning of the week and put it away for self-keeping. That way you cannot spend more than you have in cash.
first do the emergency fund deposit.
Then do the debt payments.
Now do your monthly bills.
Lastly withdraw the variable amounts in cash, and put them into separate envelopes.
This system is old-fashioned, but it works, as you do not have to worry about overspending. When your envelope is empty, you can’t spend anymore.
Step five:Make small cutbacks.
Continue to cut back on non-essential business spending as much as you can at this point, so you’re able to stick within your spending plan.
Try to make small weekly cutbacks, take a look at things you normally buy for the business and see if you can cut out a few of them, or spend less on them. Groceries? See if you can buy house brands instead of name brands. Utilities, switch lights and office machines off, if not in use. Stationary, save money on things like new pens, paperclips and envelopes etc.
Category: Cash Flow5 Quick steps to improve your Business Cash Flow was written by:Author:alan scholtzAdded: Wed, 03 Oct 2007 09:35:26 -0400 This Article Has Been Read 115 times View all alan scholtz's articlesAbout the Author: Another great way to get out of debt faster is to make more money in the business. Look at ways you can make money on the side — Take 30 minutes to brainstorm. Are there ways you can start a small home internet business online? |
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