Finance Coach - Vol. 27

Finance tip: Debt

Speak to you creditors. For most people, when they owe someone money, they try their hardest to avoid contact with them. They ignore their calls, don’t reply to messages, delete their emails, etc. If you owe people or institutions money, and are having trouble meeting your payments, don’t go down this road. Pick up the phone and call them. If you explain your situation, and make it clear that they will be paid, and that it’s just a matter of when, they will feel more at ease. Alternatively, offer to pay a smaller amount, just so that they can see the debt is being reduced somewhat. What lenders want to know is that they will get their money back, and it’s only when they’re ignored that they start to get aggressive. Also, these days, everything is negotiable. So speak to your bank about dropping your interest rate slightly, or chat to the stores that you have outstanding accounts with about reducing your finance charges. You may get stonewalled, but the chances are good that they will give you a break of some kind, especially if you make it clear that you do fully intend to pay off the debt…

Business tip: Strategy

Plan for a worst case scenario, before it happens. Most business owners would like to think that their businesses will carry on functioning as long as they want them to, and don’t like to dwell on what would happen if disaster were to strike. Planning for a worst case scenario, however, is an exercise that all businesses should go through. What would happen if you or one of your key employees were to die unexpectedly? Is the succession plan clearly laid out? Are your operating systems written down so that someone could step into the breach and take over? What if your premises were hit by extreme weather? Is your insurance up to date? Or what would happen if you were to lose your biggest customers? How would you go about replacing them? These are just some of the questions you should ask. Each business is different, and is exposed to risks of different types, so these questions will vary. But they are necessary questions to ask – and they should be asked now, before disaster strikes. This way, if something terrible were to happen, you would already have a plan in place. You would be better prepared to deal with the blow, and would stand a much better chance of recovering from it…

Yours in finance,

Gareth Cotten