Managing debt for any business is an essential part of growing it. Creating a thriving business with sufficient cash flow that becomes an asset is critical to controlling the company’s debt. The biggest challenge for most owners is managing the debt so that it works for the business rather than against it.

As a critical component to the business, owners need to participate in the business strategically and operationally. Eager to increase the bottom-line profits, independent insurance agencies focus on growing sales. Internally good management practices impact the business with a positive cash flow for managing debt. Externally, business approaches aligned with the insurance industry guidelines help to differentiate your company from the competition.

Tip #1 Know Your Cash Flow

In today’s market tracking the cash flow reveals the financial health of the business. Knowing the daily cash flow and whether or not it’s capable of supporting the business over the next six months is a progressive course of action. The information allows you to manage the potential debt today, while planning for tomorrow’s possibilities.

There’s another aspect of management associated with debt and cash flow – it’s knowing exactly where your money is being spent.  Unseen spending is a distraction that reduces profitability. Poor planning or decisions based on “what if or maybe “will always trigger debt.

As a service company selling the insurance policy and accumulating receivables is only part of a profitable transaction. Remember, receivables are paper records, not accessible cash- yet.

  • Sales and profit margins, generate cash.
  • Management executes payables and expenses.

Tip #2 Financial Reconciliation

Not all business owners have an interest in accounting, although they should. Some look at the bank balances without considering the actual cash balance. The bank balance reports debt paid. There is no accountability of transactions waiting to be cleared. It’s important to understand, bank balances are reconciled, cash balances are managed.

  • Not all debt is negative. It’s poor debt management that prompts the trouble.
  • Distinguishing good debt from bad debt is an acquired skill.

Debt management includes making sure business plans, expenses and operational functions are working together at-all-times. It allows the owner to focus on growing the business forward with fewer distractions. Follow-up with routine cash analysis to verify sufficient daily cash balances and you prevent catastrophes from happening along the way.

Tip #3 Cash Profit Solutions

Bottom-line, business growth or profits won’t happen without cash or debt. The consistent cash infusion from receivables or financial funding fuels the daily operations, maintaining staff, inventory and taxes. After all the expenses have been deducted from the incoming revenue, what’s left is profit – setting the foundation for building a solid future.

When cash gets tight, the response is usually to cut costs or increase sales. These are viable solutions to managing debt with two consequences. Cutting costs should not affect performance related to product quality or customer service.  Second, increased profits need to offset the added business expenses linked to more sales.

  • Successful companies survive with profits and have learned the art of consciously leveraging debt.

Tip #4 Capital Resources

When it comes to business, the classic rule of thumb is to have a relationship with a financier before you need it.  The relationship should be with an industry expert – they comprehend the business environment and the industry challenges.  They also become an advocate for your business, helping you to develop business practices that work in your favor.

To grow the business, you need cash. And to get the cash, you need a clear trail of managing debt. It’s a vicious circle, but it’s a challenge that you can overcome with the right partner.

Consider securing a short-term loan or debt consolidation. Choose between revolving credit lines or equity loans with negotiable interest rates. Depending on the size of the debt, a long-term loan may work, allowing the business to amortize the expense over a specified term.

  • As a business expense, this is a tax deduction.


No business operates without debt. Flourishing businesses manage debt and use it as a stepping stone to build the next generation of business. Learning to manage business debt, increases the potential for future profits, ownership equity and access to working capital.