My Debt Relief Plan

Leaping Over the Debt Option

For a certain company to be realized, the manager or pioneer of the business absolutely needs cash. No profitable business would survive without capitalizing and investing on it. More than this, a bigger amount of money is needed for further sustaining and maintaining the business into its profitable condition.

In the lifespan of a certain business, especially those which are not yet well-established and still developing its niche in the industry, scarcity of funds and sources of it is inevitable. In this certain situation, there are several options for the business or the fledgling company. These options however are not all business-friendly. It may be helpful in a way but it is a double-edged sword. It may either improve the business or end its existence. However, the thing that every company should try to avoid is the option of debt.

Some may contend that debt is a natural phenomenon when it comes to business but actually, it is not true at all times. A company free from debt could also exist and more than that could even outlast other competitors which have accumulated debts. What then should the businesses and companies do in order to avoid debts and leaping into this luring option? There are several things which they could do- this may be simple but at the end of the day, all interventions boil down into these simple things.

First is setting a new method of payment to your customers. This step may entail some unnecessary and undesirable feedbacks but it really depends on how you explain the need for doing so. For example, the current payment method for your appliance business is to give a thirty percent down payment. You have the choice to increase this down payment to a higher amount or if not, lessen the number of months for the installation basis of payment. In this way, you can ensure the steady cash flow into your business.

Another is to offer customer privileges for payments made earlier than the expected date. This may come in the form of freebies or discounts. This strategy may stimulate your customers into aiming for an earlier pay to achieve more privileges. Anything which may arouse the attention of the customers into ensuring your company a cash flow is a good method for avoiding debts to external sources.

Third is through keeping an eye and controlling the manufacturing of products. Most of bankrupting businesses overlook this aspect of production that is why their tendency is to acquire debts in order to continue the production of materials. We have to remember that the more our business produces the more amounts we pay for the supplies used for making the products. Through controlling the flow of products, there would be enough time for the business to clear off these items in the stock room and less payments to be made to their supplier of materials.

Debts bring more harm than good to a certain company. This is true most especially to businesses which have just started off into the venture. Debts may be a considerable source of fund but it is also deceiving in another perspective for they make the business more vulnerable to bankruptcy and failure.

Benedict is a freelance article writer that has a passion for finance, property and the Internet. With the increasing financial problems within the UK more and more people need expertise from companies such as Wilson Field Ltd Insolvency and Liquidation Practitioners.

Add comment November 10th, 2007

Some Debt Solutions Proving Harder To Get

Recent developments in the debt solutions sector means that borrowers in trouble are finding it harder to escape their debt burden. Over the past few months, as the credit squeeze bites even further, banks have allegedly hardened their approach to agreeing to Individual Voluntary Agreements (IVAs).

Although one of the most used ways of discharging debt, the amount of IVAs agreed has been reducing steadily even though the figures show that more people are getting into financial difficulties, and that looks set to rise as even more borrowers get over-extended. The IVA is the last resort before going bankrupt but the Debt Resolution Forum (DRF) claims that banks and credit card companies are setting out to do as much as possible to block IVAs, unless they get a combination of higher payments from their borrowers and lower fees charged by debt solutions companies and IVA providers.

An IVA cannot be granted unless 75% of the creditors agree to it, but because banks have been recovering as little as 10% of their debt through IVAs, many have simply been refusing to sanction the agreements. But, the banks are quick to point out that they are not deliberately frustrating the IVA process. Mark Hover, head of The Insolvency Exchange (TIX), a group that represents HBOS, HSBC, RBS, Direct Line and Marks and Spencer, said: “We want more acceptable returns to creditors. Plus, IVA providers are still charging a ’specialist’ fee for what is now a ‘commoditised’ product. As the average IVA fee is around 7,500 we think that should fall to nearer 5,000 reflecting the lower administration charges actually incurred on most agreed IVAs.”

Hover counters the DRF claim that banks have been rejecting more IVAs stating that acceptance rates are staying steady at around 80%. But, in direct contrast to the view put forward by the DRF, TIX believes that more over-stretched borrowers would take out IVAs if the fees were lower. However, it’s the pressure to reduce fees that is forcing debt solutions companies to reduce their advertising, and they in turn are finding that their conversion rates are falling.

As a consequence, as well as watching their own incomes dwindle, many insolvency practitioners are concerned that effective debt management advice is becoming harder to get for over-stretched borrowers, and are urging the banks to reconsider their hard-line approach to accepting IVAs.

With over 250,000 people contacting debt charity Consumer Credit Counselling Services (CCCS) since the start of the year, up almost 25% on the same period last year, it is becoming increasingly clear that many people are struggling under the burden of unmanageable debt. The banks and the insolvency industry need to settle their differences in order to help those who need it most.

Add comment November 10th, 2007