What Are Some Ways to Combat Corporate Debt?


Quick Answer

Some ways to combat corporate debt include trimming costs to free up cash, reviewing budgetary strategies, making higher-interest debts a priority, negotiating with creditors and consolidating debts, advises Entrepreneur. Companies may benefit from using credit counseling services when addressing some of these issues, especially when dealing directly with current debts and creditors.

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What Are Some Ways to Combat Corporate Debt?
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Full Answer

When analyzing costs, companies must first identify the part of the business that is primarily responsible for the debt and address issues directly within this area, according to Entrepreneur. Similarly, non-productive areas should either be cut back or eliminated and unused equipment sold. The company's debt has, to some extent, resulted from ineffective budgeting, so future budgets should be tailored to more realistically meet the company's current situation to avoid going into greater debt.

Debts that accrue the highest interest should receive the highest priority when making payments, warns Entrepreneur. However, if an owner has personally guaranteed some debts, and a creditor can come after personal assets, these debts should receive the highest priority. Companies under hardship conditions also benefit from dealing with creditors one-on-one to negotiate repayment structures that may be more beneficial. Under certain conditions, loan consolidation may offer a convenient way to reduce overall monthly debt payments without damaging the company's credit rating and ability to operate effectively in the future.

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