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The world has significantly changed for businesses over the last couple of months in the face of the COVID-19 pandemic. While access to cash flow has become critical to ensure liquidity in the post-COVID world, many businesses are finding themselves in significant debt due to the crisis.

Sandra Beswick, Director at financial and strategic advisory company Fluence Capital, the COVID-19 pandemic has resulted in unprecedented levels of debt for businesses of all sizes.

“We’ve seen fundamental changes to the South African business environment in a short period with market conditions and changing consumer behaviour pushing many businesses to the brink. While having your business in debt can be a daunting experience, the most important thing to do is to be proactive and face the problem head on. Many wrong decisions are fixable, but indecision or taking too long to tackle your debt can have the most adverse impact in a crisis.”

Businesses will also now have to start repaying loans from the various government support schemes introduced in March. Sandra says business owners should approach funders to restructure the loans or create a new loan agreement and calculate the loan repayments on the amount owing.

Fluence Capital outlines 6 critical steps to help business owners eliminate debt:

1. Determine your financial position

Sandra says the first and most critical step is to conduct a thorough assessment of your financial situation as it will be a key factor in determining which direction you can take your business in the future. Business owners need to shift their mindsets as borrowing and raising debt does not always assist the business and could in many cases leave the business in a worse position in the long-term. 

“If you want to reduce business debt, you need to understand what got you into the situation in the first place. This will help you understand your current cash flow as well as help you identify which debts should be dealt with first. If you had to take out some type of loan or borrow money during the crisis, you’re not alone. To avoid being stuck in debt for many years to come, prioritize paying off your debt as soon as possible.”

2. Cash  flow management 

Regular cash flow planning is essential in determining whether your business has the necessary cash flow to sustain ongoing business activities. 

“If the forecast shows that you do not have adequate cash flow, then you will need to either seek additional finance to cover the shortfall or modify your plans accordingly.” 

3. Cut unnecessary costs 

Cutting costs is one of the quickest and easiest ways to improve the profitability of your business. Sandra however cautions business owners to be selective about where they cut costs as sometimes it can be counter-productive. 

“There are a number of effective ways to reduce costs in your business without affecting its efficiency. Be very critical during this step. If it doesn’t contribute to the core of your business, remove or cancel it.”

4. Revisit the budget & take control of your cash flow 

If your debt keeps piling up, it probably means the company’s current budget is no longer conducive. 

“Create a budget based on the business’s current financial situation. Make sure your business’s revenues can more than cover your fixed monthly costs like rent and utility bills. As well as generate cash flow to meet debt obligations. Then, allocate a portion for variable costs.” 

5. Explore other streams of income

A crisis, as COVID-19 has proven, can be a great motivator for businesses to get creative and adapt their offerings according to changing market conditions. 

“Consider introducing other streams of income that are complementary to your business and won’t require incurring more debt. It will also be valuable to look into creative and innovative ways to increase customer sales. Consider offering markdowns on merchandise or discounts on services, especially for loyal and repeat clients.” 


Multiple debts can mean multiple fees and interest charges. Sometimes the easiest way to get in control of your debts is by pulling all of the amounts together into one monthly payment plan.

“Rather than making multiple repayments to multiple lenders, you’ll be making one single payment based on one interest rate. This will save you money over time. It is vital to ensure you adhere strictly to your budget so as to ensure you don’t re-accumulate any other debts.”


Thousands of businesses are currently experiencing debt challenges as a result of the pandemic. Whether your sales are down, profits aren’t what they could be, a poor economic climate squeezing all profitability out of your company, or something else, don’t turn a blind eye or make changes that aren’t necessarily helpful or targeted to specific issues. 

Successfully tackling a debt problem requires you to take a step back and view the bigger picture so you can identify where to concentrate your efforts before the problem spirals out of control.

“Pinpointing why your business is experiencing difficulties with debt could mean the difference between saving your business and being forced into liquidation. To prevent your business from entering any further financial uncertainty, take a proactive stance. It is therefore highly valuable to seek the guidance of an experienced professional who can work with you to implement a business turnaround plan to give your business renewed direction and get your business back in the black.” 

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