In the United States, the e-commerce market has been evolving constantly during the past decade or so. Moreover, the retail e-commerce sales are predicted to grow at a rapid speed in the years to come, going from around 360 billion U.S. dollars in the year 2016 to slightly more than $ 638 billion in the year 2022 as per statista.com. In this context, you must understand that “launching and running an e-commerce store can be an adventurous, as well as, daunting journey. It is filled with landmines which should be avoided right from the beginning” as aptly described by huffingtonpost.in.
We know that e-commerce businesses take traditional loans from financial institutions and banks so that their business could take off smoothly. It has also been observed that an e-commerce business owner typically takes loans from different places along with the conventional financial institutions. This could culminate in a gigantic debt in the years to come. As per experts, about 50 percent of the e-commerce undertakings or ventures actually fail during the first four years from their inception. In this context, it is pertinent on the part of e-commerce businesses to manage even a small debt with utmost urgency and care. If you wish to stay afloat, you must ensure that all payments are updated and paid on time and you must not lose your grip on any debt whatsoever. It is crucial for all e-commerce entrepreneurs to have a clear vision and idea regarding the effective way of tackling and managing debts successfully, irrespective of the size of the debts. In case, you are using bank financing for operating your e-commerce business, explore the important tips for better managing your business debts and financial relationships. Moreover, you may get in touch with experts at Nationaldebtrelief.com for smart debt relief and debt management solutions.
Determine the Exact Amount You Owe
You must initiate your debt elimination process by making a comprehensive list of all your existing debts including the names of the creditors, total debt amounts, due dates, and monthly payments. You may consider scrutinizing your credit report for confirming all the debts included in your list. When all your debts are right in front of your eyes, you can easily see the actual bigger picture and know the complete debt scenario, as far as; your e-commerce organization goes. There is no point in generating a list and forgetting about it entirely. You must necessarily refer to your list of debts periodically while paying your bills. You must consider updating your list after every few months. Keep track of the changes in debt amount.
Pay All Your Bills Promptly Every Month
Running an e-commerce business involves a number of expenses every month. You must stay on top of those bills and payments. Late payments and missed payments must be avoided at all costs. Just in case, you miss two consecutive payments, your finance charges and interest rate will shoot up. Remember late payments would be making it more difficult to completely eradicate your debts.
Be Organized, Create & Maintain a Bill Payment Calendar for Every Month
If you are using a bill payment calendar, it would be easier for you to determine which bills must be paid when and with which paycheck. You must make all the payments timely as per the schedule you had set right at the beginning of your debt repayment process. Know all your monthly expenses and obligations as an e-commerce business owner.
You must pay all your employees’ wages as per the scheduled date. Make payments to all business suppliers and partners promptly. You must make all your credit card debt monthly repayments on time otherwise; it would impact adversely your ability to borrow funds in the future. An e-commerce enterprise has several ongoing costs like utility bills and rent that need to be paid without fail to keep the business running smoothly without any hitches. Moreover, paying these surely would impact your credit rating in the right direction.
You must be extra vigilant about not missing any payments for your secured debts every month. In the case, you are operating your business as a partnership or a sole proprietorship; you would liable personally for all your business debts as well. Creditors are always hoping to take away your assets, the moment you fail to make the monthly repayments. It is, therefore, a wise idea to start a limited liability company or a corporation.
Always Payoff the Minimum Payments
Remember, a minimum payment would not be helping you achieve progress. However, it helps in keeping your debt from multiplying or growing. Once you start missing payments, you would increasingly find it more difficult to keep up the pace with the missed payments.
Determine Precisely Which Debt Would Be Paid Down
It is a good idea to pay off all your existing credit card debts. Prioritize debt payments. Usually, credit card debts having the highest rate of interest gets top priority while repaying your debts since it is costing you the maximum amount of money in terms of interests.
Negotiate With the Lenders & Get Better Interest Rates
While trying to get your business loan application approval, negotiate in such a manner that lenders would compete with each other for grabbing your business. You must sound very determined, professional, and clear in your strategy as an e-commerce entrepreneur and the conversation may be something on these lines “Mark, we’re in the process of interviewing banks to see who we want to select to refinance our equipment loans with. Is this a good time for me to ask you some questions to see if your bank might be a good fit for us to work with?” This seems to be a wonderful suggestion by inc.com.
Negotiate for Getting Better Loan Payment Terms
It is essential to safeguard your business’s cash flow. So, it is crucial to make your minimum payments lowest possible for getting the maximum flexibility for your business to effectively safeguard its cash flow. Moreover, you may negotiate and consider turning your interest-only payment effectively into an amortizing-payment by simply paying down promptly the additional principal.
Conclusion
Even though e-commerce actually looks simple and easy, it may involve a lot of dedication, perspiration, and hard work. So it is best to be practical and avoid going about expecting to launch your e-store and have thousands of customers visiting your e-store overnight. Building a robust e-commerce business would be taking a solid strategy for efficiently managing the organization’s debts and all financial relationships.
