Debt can befall any business, no matter its type, size or age, which means yours is never completely protected against it. You can, however, go a long way in safeguarding yourself from such financial turmoil by simply resolving to deal with it now. It’s true, even if you are very much in the green with your profit and seemingly nowhere near the possibility of having to face debt in the foreseeable future, if you truly want to secure your business against the threat of it, you have to put protective measures in place this instant.
Resolve to make sure you always get paid
If you want to protect yourself against having to deal with money that you are owed quickly, then you need to start as you mean to go in the way that you deal with customers who don’t pay you.
This means never allowing any customer the chance to take advantage of you in regards to the money that they owe for a service or product that you provided them. It even means ensuring that even your oldest and most loyal of customers continue to pay you on time, every time. What you also need to do is take out insurances on every deal that you make. In this instance, it’s crucial that you understand the difference between LCs and BGs. In regards to the bank guarantee difference LC, you have to decide whether a Letter of Credit, an agreement that reduces your risk of not getting paid after you’ve delivered your product, is the right course of action for you to take. Or, whether a Bank Guarantee, an agreement that protects you should the contractual obligations not be met by the other party, is better suited to your situation instead.
By getting used to working and acting in these ways now, you’ll never find yourself lowering your guard in the future, which means you’ll never see yourself fail foul of this kind of debt.
Make sure your accounts are separated
Businesses that work from one bank account often fall into the clutches of debt. This is because money is spent without care. Often, in fact, money is spent that is not even there in the first place.
Aside from the obvious risk that is you or your employees accidentally spending money that isn’t yours or theirs to spend, there is also the fact that having one account always brings about troubles in regards to accountancy. Simply, when your accountant comes to checking over your books, they will find it incredibly difficult to decipher where, why and how your money is being spent if it is all coming out of the same place, and this kind of confusion often leads to debt mounting somewhere down the line. So, make sure you are opening separate bank accounts for all the individual areas of your business, and yourself, to tap into whenever necessary.
Debt is serious, and if your business is befallen by it, then serious problems will occur. To stop you from having to face such problems in the future, make sure you do all you can today to protect your business against it.
