Business Feature

HOW TO DEAL WITH BEING IN DEBT

At some stage, most businesses accumulate a debt. Having your business in debt can be a daunting experience, but there are positive steps to take to get your finances back on track. This article, taken from the My Business Health website, provides some pointers on managing debt, from assessing your financial situation through to getting help.

1. Assess your financial situation The first thing you should do is to assess your debts and the money owed to you. The best way to do this is to check your financial records and keep on top of your cashflow and your financial situation.

Don’t leave your accountant out of this process as they may be able to provide some deeper insights into your situation.

You could also consider talking to a business adviser to help you through your process.

2. Prioritise your debt Prioritising your debt can be a quick way to get creditors off your back. Begin by identifying what you can afford to pay now, what you can pay later and when to go on a payment plan. A budget can help plan and direct your money where it matters the most.

3. Chase up money owing to you Contact late or non-paying customers. If you're having problems getting the money they owe you, do some research on how to deal with debtors who are reluctant to pay.

4. Talk to organisations you owe money to Speaking to your creditors early can prevent late penalties or calls from debt collectors. When you talk to them: • explain your circumstances • ask if they have any hardship provisions • ask if you can extend the due date, make a partial payment or go on a payment plan • keep a record of your conversation.

If your debt has been passed onto a debt collector, there are certain laws they need to comply with. Find out your rights and responsibilities by: • downloading MoneySmart’s Dealing with debt collectors (www.moneysmart. gov.au) • reading about debt and debt collection on the Australian Competition &

Consumer Commission (ACCC) website (www.accc.gov.au).

5. Get advice and help There are many agencies and experts who can help you manage your debt. These include: • the National Debt Helpline on 1800 007 007 (www.ndh.gov.au) • the Australian Taxation Office supporting your business on 13 28 66 (www.ato. gov.au) • government grants, incentives and other funding programs for businesses (www.business.gov.au)

Health and wellbeing organisations Being in debt can be an extremely stressful experience so don’t forget to look after your mental health, and that of your staff and family. There are many organisations that can help you such as Beyond Blue, Lifeline Australia and Business in Mind.

Find out about organisations that provide information and support to help you with your health and wellbeing on the ATO website (https://www.ato.gov. au/General/Financial-difficulties-and-serious-hardship/Small-business-ownersexperiencing-mental-health-issues/Health-and-wellbeing-organisations/).

6. Contact your bank Talk to your bank about your finances and explain what you’ve done so far.

It’s a good idea to prepare a profit and loss statement or cash flow forecast. These can give your bank an understanding of the issues your business is facing. This can help when applying for financial hardship.

If you feel you can’t reach a solution with your bank, consider contacting the Australian Financial Complaints Authority (www.afca.org.au).

About My Business Health My Business Health is a website managed by the Australian Government.

With so much information available online it can be hard to know where to turn for business support. My Business Health helps small business owners navigate the system to find what they need to face challenges and identify opportunities to grow their business.

Pulling together a range of resources, My Business Health provides easy access to tools, templates and tips to manage stress and proactively engage with running a small business.