How Small Business Debt Consolidation Can be Good for your Business

Having creditors is a part of doing business. Without them, you would not have the necessary resources to trade successfully. Suppliers are a key part of your team, but managing their accounts can have its own challenges.

Having debt spread across several different suppliers can create cash flow issues and result in your team spending countless hours reconciling accounts and attempting to liaise with members of your team to piece together what is owing and when.

Many companies use their credit cards as a means of buying themselves time to repay bills, and as a simple means of managing their creditors – all in one place. Others like to rely on credit terms extended by their suppliers. In both cases, the issue of managing the debt can become expensive, unwieldy, or both.

Bringing all your short-term debts under one umbrella, which is both affordable and easy to manage, can free up cash flow and provide your administration staff with considerably less headaches.

Let’s look at an example.

Company XYZ currently deals with 50 different suppliers and has financing arrangements in place with 18 of them at varying levels of interest. The balances are either paid directly each month or funded by credit card at a high rate of interest. XYZ’s admin team estimates that it spends around 17 hours per month managing the various debt arrangements and disputing balances and interest charges with the companies concerned.

Moving to a refinanced option where all balances are paid monthly through one established debt facility would cut this time in half and replace the more expensive credit card debt with a more manageable interest rate.

“Interest rate charge is more closely aligned to the real risk involved”

Bigstone offer the perfect financial tools to do this. Their unique risk based manageable model means the interest rate charge is more closely aligned to the real risk involved – you won’t be charged one high-risk-rate-that-fits-all as credit cards do. Consolidating your debts via this process will centralise the management of your accounts and reduce the overall expense of paying interest on credit cards or multiple supplier accounts. This will reduce the time needed by your staff in creditor management freeing them up to help you grow your business.

“You may face a legal obligation to continue using a supplier when you are indebted to them”

But it’s not just the cost that needs to be considered. Relying on credit arrangements with suppliers can see your hands tied when it comes to a choice of suppliers. You may face a moral or even a legal obligation to continue using a supplier when you are indebted to them, and this can have other consequences for your business in terms of cost, quality control, ease of delivery and the selection you are able to offer your customers. You may even find those who don’t charge interest won’t give you their best prices, as they know you are dependent on their funding.

“Separating your financing needs from your supplier selection makes good business sense.”

A typical business managing $50,000 of creditors bills for a month via credit card will incur almost $1,000 in interest costs via credit card. Attempting to replace this with a standard loan or overdraft facility can be difficult. Offering security to receive financing is an option but involves more complication and can result in you drawing personal assets into being exposed in a business situation.

Go Big… go Bigstone

Bigstone’s debt facility can provide loans of up to $250,000 that may be borrowed for up to 2 years in length. This provides you with a strong level of funding, at competitive interest rates for a period that can get you past the growth hump of your business. An application can take as little as 15 minutes to complete and approval can be received within 24 hours. Bigstone’s unique marketplace lending can match investors looking for a better than average return with borrowers like you – and remove the fat profits often left in the hands of the lenders.

Book a time with someone in the Bigstone team to discover how affordable and simple finance can be just one click away.

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