A lot of times, business owners will use a personal credit card to service their business debt, or vice versa; comingling their personal money with their business’s cash flow. The reality is, you only have a certain amount of money to pay your personal bills and loans with, and that should be managed without co-mingling personal monies with your business money.  Paying down debt should be part of your monthly budget.  In your personal financial arena, you will manage that budget based on the net salary you and your spouse deposit into your bank accounts.  If you are using the business to service your student loans; that activity is still regarded as personal money.  Your business cannot pay your student loans by labeling them as an expense on your Profit and Loss.  You can take the money out of your business; just be sure it goes out as an Owner’s Draw/Shareholder Dividend.  The same principal will apply in that your business only has so much money to pay bills and servicing debt. Therefore, your business’s debt must be managed by the cash flow requirements that you have, never by using personal lines of credit in your business.

2. Flipping credit cards

It might be tempting to shift your student loans to a personal credit card that has a lower interest rate than your loans, but this is slippery slope of debt mismanagement, and a definitive sign of a cash flow problem. You need to explore healthy, proactive strategies to service the debt. 

3. Concealing your debt from the people closest to you

This is the most damaging symptom. I know that debt is personal and sometimes very hard to be honest about. But, if you’re facing thousands in student loan debt and being dishonest about that reality, the consequences will be dire. If something happens to prevent you from paying off that debt, for example, your spouse could be responsible for picking up the slack. A surprise bill of tens of thousands of dollars that you’ve willfully concealed isn’t just an enormous financial burden, it’s a betrayal of trust. 
The same goes for the relationship that you have with your employees and vendors. If you’re suffering as a business owner with a lot of debt, you don’t want to lie to your employees when they ask how the business is doing. If you’re not able to service your debt, you’re going to have a hard time making payroll or paying your vendors. The truth will come out, and it’s up to you to determine how harsh the impact will be on your relationships. 

Ok, not literally, but you have to find the courage to be honest and vulnerable to your spouse and loved ones about your debt. Whether you want to admit it or not, it affects everyone. The negative effects of hiding and mismanaging debt will seep into your business and marriage, potentially causing irreparable damage. Worse still, this dishonestly will isolate you and make managing your debt seem like and insurmountable task. The truth is that you can’t go through this alone! 

2. Restructure your debt

The next step is to create a proactive strategy to service your debts. I recently helped one of my clients consolidate seven separate business loans into a single payment, cutting the terms from ten years to five and saving more than $100,000 in accrued interest. You can pull in a banker to help restructure your debt. And if you need a banker, let me know, I have excellent referrals. The bottom line is that you don’t have to go through the stress of managing your loans alone! 

Cash flow consultants, like me, take a deep dive into your books and strategize ways to limit liability, offset debt, increase profits and keep your cash flowing. Following a review of your financials, I provide you with the tools and education needed to feel totally empowered while making informed business decisions regarding your company’s cash flow.

Cash Flow Forecasting App

Debra on the move! 

Peebles Seminar. Advanced technology has reshaped and improved the efficiencies of countless industries, so shouldn’t it do the same for your investment portfolio? Hear Debra speak at Peebles Prosthetics in Lakewood, October 4th.

4GenNow Summit. Did you know a business could be profitable and still have a cash flow problem? Perhaps your business is making a profit but you are still juggling vendor bills or not paying yourself as much as you want because the cash tap has run dry before the end of the month. Managing cash flow takes proactive strategies; it’s not about the next 30 days. It’s about looking 90 days into the future to avoid a cash flow storm. 
Hear Debra speak CU South Denver on October 12th.

Light the Night Walk. Did you know that every 3 minutes someone is diagnosed with a blood cancer and every 10 minutes someone looses their battle? Come out and join us for the Light the Night Walk on September 27th.


 

On Your Team