Business debt

While most businesses operate on some level of debt in the form of business solicitors, loans, mortgaging commercial property, and other financing, the situation becomes more serious when unsustainable debt spirals out of control; in such cases, business solicitors are needed to provide guidance and help navigate the best possible solution.

Managing your debt levels is important to ensure your business is well-placed to adapt to changing circumstances. Simply put, the less debt you have, the more resilient your business is to risks such as falling revenues or higher prices. 

Taking on heavy debts that your business cannot afford in the short and medium term can also put the business's future at risk. So, it is important to identify what is considered a sustainable amount of debt for your business to take on. 

Dealing with debt can really slow a business down and take you away from your day-to-day operations. In serious cases, losing control of your cash flow because of debt can destroy an otherwise successful business. That's why it's important not to ignore debt issues in business but instead take proactive action to help you regain control.

Practising effective debt management is important to ensure that your debts are serviceable within the overall context of your company’s size, turnover and industry to ensure your business is financially stable and resilient. Enlisting the support of an accountant or legal expert can be crucial to give you the support you need to find the solution to any debt-related issues through proactive debt management.

Common causes of business debt

Business debt can grow for a variety of reasons, both internal and external to your business.

The state of the national economy

External adverse events like recessions or economic downturns can have a severe impact on your customer base, meaning that they will often have less money to spend, impacting your income and profits. This may cause your business to operate at a loss or mean you may have to borrow money to tide you over until better economic conditions return.

Unexpected expenses

Significant one-off or ongoing costs that come out of the blue, such as repairs, problems with faulty stock or increased costs from suppliers may also impact debt within your company. Your customers and suppliers may also refuse to pay what they are owed to your business, leading to an unexpected loss of income.

Business expansion

While expanding your business may increase profits in the long term, it will usually involve increased costs - including possibly a more expensive lease on a new office building or increased mortgage costs if buying real estate outright.

Poor Management

Mismanagement can also lead to increased levels of debt. Key strategic decisions that go wrong can lead to company funds being eroded and increased levels of expenditure, which may sharply increase debt. Managing business debt requires effective debt management strategies to mitigate risk.

Importance of having legal assistance

Whether you're facing problems dealing with your own company debts or are experiencing difficulty recovering the money you are owed, we can provide guidance.

Our legal experts can provide you with professional advice related to unpaid debts, taxes, interest, and bankruptcy and arrange for credit control policies to increase your company’s financial stability.

Whatever your situation, it's important to seek legal advice as soon as possible. If you are facing bankruptcy or insolvency, we can work with you to develop a recovery strategy. If you are owed money by customers, we can help you recover what you are owed and get your business back on track.

Expert support

Our friendly, knowledgeable solicitors are here to provide all the help and advice you need so that you can get on with running your business. With our free initial assessment and same-day response promises, you can easily find out what your options are before planning your next steps. So if you're looking for legal advice to support your business, contact us today on 08082747557.

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