One of the challenges you will face in running a business is financial risk. Financial management becomes even more challenging in the face of unforeseen circumstances such as natural disasters or epidemics. In view of the economic conditions faced by Sri Lanka in the past and currently faced, many businesses took various types of loans to run their businesses and today's article we are talking about some simple strategies that you can follow to pay off those loans quickly without getting stuck in them.

1. Do a budget check

If your business doesn't have a budget, now is the time to create one. It is ideal to take care of all your expenses and income. In addition, you will be able to identify things like rising expenses or falling incomes early. If your business has many customers or multiple sources of revenue, categorizing them will help you understand which segments are most profitable. Also, you should verify your total loan amount correctly and through the budget you can get a proper understanding of the amount you receive and the amount you must pay. After that, it is essential to treat your loan amount as a monthly expense so that you can maintain the loan installments without getting stuck.

2. Cut Costs

When you examine your budget, you realize that you can eliminate or reduce some expenses. One way to pay off business debt is to cut unnecessary expenses. Categorize your expenses in the following ways and find unnecessary expenses,

Necessary Expenses: This expense is very important, and you should continue to pay for it and it is mandatory. Business taxes etc. would fall into this category.

Negotiable expenses: These types of costs can be significant, but you can reduce costs by negotiating with the relevant supplier or finding a better deal. Employee benefits, insurance or even some contractors fall into this category.

Deductible expenses: Stop this type of spending as soon as possible. Here you must go to the point of unnecessary office expenses and sometimes firing an underperforming employee. Also consider infrequent expenses such as annual memberships or technology subscriptions. These may automatically renew unless canceled earlier.

3. Negotiate with lenders

If the business loan structure doesn't work out, talk to the financial institutions that gave you the loan to renegotiate your loan terms. This will allow you to renegotiate the loan repayment period, monthly interest and the total amount owed. Explain your financial situation to the lender. If you are a good borrower, they will be more likely to work with you again in the future. Therefore, you should not be afraid to discuss your repayment options with them. And remember that you should get your loan with a financial bank through formal loan methods. Then it becomes easier for you to get concessions.

4. Consolidate loans

If your business has multiple loan payments due to loans from different lenders, the premium and interest you will have to pay will be much higher. So, think of a way to bring all your debts into one place. You can discuss this with your finance bank.

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