As a business owner, you probably understand the key elements of bringing in a profit. Your goal is to make costs and expenses as low as possible so that the money you earn from sales or services will exceed the amount spent. While this is your ultimate goal, you have probably seen that your credit card debts are creating more problems than you expected.
Business credit cards are similar to the consumer cards available on the market, but it is designed around the needs of a company. Any business owner or qualified representative of the company can apply for the credit card to help build up the business credit. At the start of any business, the owner’s personal finances are often considered when trying to qualify for the new card. The business owner might need to show a certain income since the company is not yet making a profit. After the card is available, a business owner is then able to use the revolving account to make purchases for the company. For example, a new restaurant might buy chairs or food supplies with the card. The creditor of any business credit card will expect the company to make payments based on the monthly expense. Depending on the card, a short grace period might be available before fees and added charged apply to the account.
Problems Paying the Card:
As any business owner understands, income in a company is not always steady. Even if the business is doing well and is starting to see more profits than losses, it is not always easy to keep up with the high cost of credit cards. Business credit cards on average have a high interest. Rates as high as 20 percent or more are not uncommon, particularly when the business is starting out. Unfortunately, that high rate along with late fees and added costs can result in a payment that is not possible to pay each month. Problems paying the credit card often arise when a business is struggling with expenses and costs.
When it is not possible to keep up with the expense of business credit cards, a company is able to settle the accounts. Business credit card debt settlement is similar to consumer settlement, but it applies directly to the company needs. If you have found that it is not possible to make your normal monthly payments on the business credit card, you will find that collection calls begin. As a business card instead of a consumer card, the available solutions are slightly different. While you can opt to consolidate, business expenses are often much higher than consumer costs and thus result in a higher minimum payment even when the interest is not calculated. Business credit card debt settlement is a method of negotiating with the creditor to reduce the principle amount on the card. By doing so, your business is able to eliminate the expense by paying a smaller amount and will end up making a higher profit margin upon completion.
As a business owner, you inevitably will have some concerns. Two main concerns are likely to come to mind when you are struggling with the cost of paying the business credit cards. The first concern is the impact to the company credit rating. While settlement will result in a temporary decrease to the business credit rating, it is not permanent and it does not mean the end of the company. Bankruptcy as a company means that it is no longer profitable and usually results in the end of the business. Settlement provides an opportunity for a second chance because the impact to credit is not as great. While the business will see some decreases, it is possible to start improving the situation almost immediately. The second concern typically relates to whether the company can continue forward after settlement.
During a business credit card debt settlement, the principle is reduced and the lender is willing to forgive the remaining amount on the debt. As a business owner, you will need to determine if you want to continue your business. Settlement does not necessarily mean that the business cannot move forward. It is a matter of your ability to recover financially and start producing a larger profit. Settlement does eliminate some of those high cost bills you are likely to pay, making it a little easier to build up your company by lowering the number of costs and expenses. Businesses often face tough decisions about the finances of a company, particularly in the initial years when start up costs prevent the growth of profits. Fortunately, as a business owner you are able to find solutions to the problems. If you want to learn more about debt settlement for businesses, call today or fill out the form for a free debt analysis.