Posted on: January 31, 2013 Uncategorized

Every blossoming CPA practice may need to take on some amount of debt to fund their growth.

But are you amassing the wrong kind of debt in your firm?

Choosing the wrong kind of debt for your practice – or having too much debt – can be detrimental to its success and lifespan.

So what might we consider the “wrong” kind of debt?

Here are just a few:

- Credit card debt

- High mortgage balance

- Personal loans at high rates.

Really, the wrong kind of debt is any debt that’s either:

A) Not necessary; or

B) Can be refinanced at more favorable terms.

Eek. Does your CPA practice have bad debt?

You’re not the only one. Not by a long shot. But you can get smart right now and start doing things differently immediately.

Start with a plan to remove bad debt from your practice. Take a rainy Saturday to systematically review every outstanding loan. For each, find a way to either pay it off (without compromising growth, of course) OR refinance at a lower rate.

If you have expensive debt (such as credit card balances), you should work to determine what other financing options are available to your business.

If your practice is profitable — or is showing strong signs of coming profitability — it’s likely that lenders will work with you to refinance at a lower rate. You should consider this particularly if you have expensive debt such as credit card balances. Work to uncover other financing options available to your business.

But when asking lenders to refinance to get you that lower rate, don’t think of it as them doing you a favor. Instead, think of it as good business for the lender. Financial companies are in business to make money from loans. If you bring to the table a good credit history and a viable business record, they’ll seriously consider lending you money and getting you out of those unnecessarily high payments you’re making. Doing so will make your company all the more profitable.

On an annual basis, you should address the debt your firm is carrying. Set a reminder to take a look at this same time next year. True, it will save your practice money on an annual basis. But it can also save you money in the long-term, when you’re seeking capital financing or even a potential business sale.

Yes, it will take time to organize your debts and search for options that are more attractive to your CPA practice. But will it pay off in the long run? Absolutely.

Learn even more about growing and strengthening your practice! Check out my book The Ultimate CPA Practice in the New Economy: 10 Secrets to Attract More Clients, Boost Profits and Live Your Ideal Lifestyle.

Best wishes,


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