Are rising costs changing how you think about debt? You’re not alone.
The Canadian Federation of Independent Business recently found that a third of small business owners reported borrowing costs were a significant concern, up from just 16% last year, with 62% carrying unpaid debt taken on during the pandemic.
While there are several factors behind increased debt, one of the biggest culprits is rising costs.
Whether you blame supply chain pressures, increased energy prices, government spending, or global instability, business owners have no choice but to navigate the impacts.
And while these global factors may be out of our control, costs don’t have to be.
Cost control is the practice of identifying and reducing business expenses to increase profits. One essential way to do this is through your financial relationships.
Here are five ways business owners can leverage their lending partnerships to control rising costs.
Be Proactive
If you’re afraid to reach out to your lender to discuss better options for managing debt or freeing up working capital, that’s a sure sign you’re not working with the right financial partner.
Rising costs mean you need a better plan. If you wait to react instead of being proactive, you’ll likely find yourself in a tough spot. A well-considered road map and a contingency plan are things a good lending partner will help you create.
Hyper-Personalize Your Financing
One-size-fits-all financing is not going to cut it when you’re dealing with rising prices.
Remember that increased business costs can result in many unforeseen impacts, from delaying receivables, lost customers, or sudden spikes or drops in demand.
That’s why working with a lending partner that offers custom financing plans is so important
Recognize That Debt isn’t Created Equal
Are you worried about interest rates on a business loan while carrying a balance on your credit card? Not all types of debt are created equal.
If you’re only making the minimum monthly payments on your corporate credit card, you need a plan to address that as quickly as possible. Every day that goes by while you carry a credit card balance increases your debt-servicing costs.
But even a loan with a low-interest rate won’t be useful if it includes repayment terms that aren’t matched to your business cycles.
Ensure whatever debt you do take on is structured to free up your cash flow and lower your monthly payments.
Invest in the Right Equipment
Simply put, equipment unlocks potential. Access to working capital can get you the equipment you need to invest in growth, and that will be essential in a competitive and increasingly expensive business environment.
Plus, the right equipment and technology can also make your business more efficient, improving productivity and reducing costs.
Flexible tools like asset-based lending can help you free up working capital quickly, so ensure you’re working with a lending partner who can offer this.
Get Control of Costs That Aren’t in Line with Industry Benchmarks
One of the best ways to determine if you’re spending too much in a particular category is to compare your costs to other businesses in your sector.
Working with an experienced financial partner who specializes in supporting businesses like yours will help you get a better picture of what your expenses should be, so you can determine if you’re over-paying in any area.
Ultimately, getting control of rising costs means business owners must consider all the relationships that propel their business forward. And that starts with your lending partner.
If rising costs are dragging your down, Essex Lease Financial can help. We offer flexible, hyper-personalized plans for accessing working capital, financing equipment, restructuring debt, and managing costs.
Get in touch with us today to learn more or get started.