In this second part of the accounting discussion, we shall focus on Liabilities.
Liabilities that a small business has usually are:
1. Debts to suppliers
Debts to suppliers
A business should strive to create a good rapport with its suppliers through:
1. Timely payments for supplies made.
2. Always responding with clarity to any of the supplier’s queries.
Having a good relationship with your suppliers comes in particularly handy when you want to grow your business. It’s not something rare to find suppliers that offer their clients goods on credit. All this is with an aim to help them grow. In this case, your suppliers eventually become your financiers.
Suppliers need to be informed early enough of any changes or difficulties that may be faced in making timely payments. This will help you come up with a favorable payment schedule. This is also particularly important in strengthening the relationship.
A loan should be taken to grow a business and not to start one. Small entrepreneurs face more risk than seasoned entrepreneurs when they take out loans to start a business.
With a debt to repay and a business to run, there are things that one needs to pay particular importance to;
1. Maintain a good credit score
This helps you should you want to take out another loan in the future.
2. Commit to paying as per agreement
It is important that you commit to repay your loan as had been agreed upon with your creditor. A loan is a double-edged sword that could run your business down if not careful. Just as with suppliers, creditors should be informed in advance of anything that may hamper the repayment schedule.
3. Choose your loans selectively
Different financiers will offer you different terms for lending you their money. Consider the interest rates that you will be paying before committing to a loan.
Sacco loans are the best for growing a business. Saccos are growth-minded and offer lower interests and more flexible repayment schedules as compared to Banks and Shylocks.
4. Do not use short-term lenders
Avoid taking loans from short-term lenders such as lending apps and Shylocks. These types of lenders do not have flexible repayment schedules suited for business growth. They will either ruin your credit score or take assets from your business with an aim to recover their money.
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