E-commerce businesses are known to take traditional loans from banks or other financial institutions so that their business can take off smoothly. However, it has been observed that when an e-commerce business owner is just starting, he ends up taking loans from various places other than only the financial institutions. This can result in a huge debt in the future. According to experts, 50% of e-commerce businesses fail within their first 4 years. All the e-commerce businesses that have even a small debt need to be careful about managing the debt. It is your duty to ensure that all your payments are up to date and the debt should not go beyond your control at any point in time. If you have to clear off a big debt, you need to ensure that you can clear it in a lesser period of time. All the e-commerce business owners should have a proper idea as to how they can manage their debts, irrespective of the sizes.
Knowing the money that you owe
It is important to make a proper list of all your debts, including your creditor, the total amount, the monthly payment that you may have to make, and most importantly, you have to mention the due date on the top. You can make use of the credit report in order to confirm all the debts that are there on the list. When you see that everything is right in front, you will be able to stay aware of the complete picture of your debt. Ensure that you do not create the list and forget how to clear the money completely. It is understandable that as the owner of the e-commerce business, you may have a number of other duties. But it is equally important to refer to the debt list in a periodic manner and update the list as soon as you see that the amount is changing.
Paying all the bills on time
A late payment can make it extremely hard for you to pay the debt, as the chances are that you will pay the late fee as well for all the payments that you have missed. E-Commerce owners need to know that if they miss two payments back to back, the finance charge as well as the interest rate increases. It is best to make use of the calendaring systems that are present on your smartphone or computer and set alerts that will help you to remind yourself that a payment is still due. If you are missing a particular payment, you should not wait until the next date of payment in order to clear the money. The best thing that you can do is send the payment even if you forget it before the payment date.
Creating monthly bill calendars
Making use of the payment calendars will allow you to figure out the bills that you have to pay. On the calendar, you can write down the payment amount of each bill right beside your due date. You can also make use of the online calendars, which will help you to keep a track of the payments that are still pending.
Making a minimum payment
If you find it extremely difficult to clear the entire debt, you should at least try and make a minimum payment. It is true that a tiny payment is not going to help you in making any progress in paying the entire debt, but it at least allows you to control the debt from becoming big. Moreover, paying a little amount of money also helps to keep the account in a proper standing. When you keep missing your payments, it becomes extremely hard to catch up. Eventually, the accounts can also go into the default mode.
Deciding the debts that you have to pay first
As an owner, it is your duty to decide which debt you are going to clear first. Paying the credit card debts before anything else is considered to be a great strategy as they have high-interest rates in comparison to all the other debts. You can use the list that you have prepared for prioritizing and ranking the debts in a manner according to which you are interested in paying them off. You also have the option of choosing to clear the debt that has the lowest balance.
Paying the collections and the charge-offs
You have the freedom of paying only that amount, which you are capable of affording in a particular month. When your funds are limited for repaying the debt, it is important that you focus on keeping all the other accounts in a good standing. You should not sacrifice the positive accounts for the already affected credit. Instead, you should pay all the due accounts, as and when your business can afford it.
Using emergency funds
If you have an emergency fund, it can help in covering the little expenses, which tend to come up once every while. Creating a small fund of $1000 is a great place for starting, and you can eventually increase the amount by another $1000. In case of an emergency situation, you can save your e-commerce business from a crisis with the help of this emergency fund.
Recognizing signs that you require help
If you see that your business is not giving back enough returns, you have the option of seeking help from the different debt relief companies, like the credit counseling agencies. Other options include debt settlement, bankruptcy, and debt consolidation. All of them have numerous advantages as well as disadvantages, and hence you need to be extremely careful. You can go through the debt consolidation loan reviews on the internet before you seek help.
Managing the debts is undoubtedly one of the most daunting tasks ever. But if you do it properly and tackle all your debts without getting anxious, you will be a winner. It is suggested that you try to clear all your debts as early as possible, so that you can see your e-commerce business succeeding, without any setbacks.