Having a good handle on managing debt is a key factor determining whether your business struggles or thrives. While being able to effectively deal with business debt is important for all company sizes and success levels, it’s especially crucial for small businesses and startups. Strong credit management and not overspending prior to positive cash flow are key to success; otherwise, subsequent financial decisions stand on a precarious foundation. Here are several ways to make that foundation stronger and build your business sustainably.


Make an itemized list of every expense you have; daily, weekly, monthly, quarterly, and yearly. Include both fixed and variable expenses. Include interest rates as well. This will give you a clear picture of your financial situation so that you can face any debt head-on.


As you need to, speak with your lenders and creditors about payment terms and plans. Vendors, too. Maintain cordial relationships and a good credit rating by paying in a timely fashion.

Connect With Customers

Before or shortly after you deliver your services and/or goods, it’s vital for you to collect payment from customers. Clear processes and expectations communicated at the outset will lessen the likelihood of late payments and increase your customers’ accountability. Payment upon delivery is ideal, when you create your invoice, indicate clearly that you expect payment due on receipt, including interest charges at 30 days (or whenever you choose) after the due date.

Communicate With Lenders

If you’ve built and sustained positive relationships with the financial community from the earliest stages of your business launch, you’ll be in better shape should you run into financial challenges. You’ll already have a trusting relationship with them, and their representatives will be more likely to be open to working with you. Banks are in the business of being paid back, so they’re understandably averse to risk. Demonstrating consistency and integrity will position you well for the future.

Manage Your Inflow and Outflow

To prevent business debt, maximizing cash inflow should be a primary priority. Payment schedules, layaway programs, prepaid subscriptions, and requiring 50% deposits are a few things you might consider, depending on the needs of your business. There are numerous creative ways to minimize cash outflow, including bartering products for supplies and services and delaying product upgrades. Small, incremental changes can make a big difference.

Addressing business debt is essential for increased viability. Consider these suggestions to keep your business profitable.