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| Illustration of Managing Business Capital Debt (Photo: Lailia Humas) |
In the business world, borrowing capital from banks is often the primary option for business expansion. However, managing business capital debt is not a trivial matter. Dra. Siti Zubaidah, MM., an Accounting Lecturer at Muhammadiyah University of Malang (UMM), emphasizes the importance of effectively managing such loans. This includes planning and sales enhancement strategies.
According to her, entrepreneurs need to have a tactical mindset when managing business capital. The money borrowed from the bank must be utilized efficiently to recoup the capital within a reasonable timeframe. Therefore, appropriate marketing strategies are also necessary to ensure that the capital generates maximum profits.
"Banks operate in a certain manner, especially in terms of installments and interest. Meanwhile, a business may not be stable; sometimes it rises or even falls. Therefore, money management must be handled properly," she explained.
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Before deciding to apply for a loan from a bank, entrepreneurs should carefully consider their financial and business plans. This involves identifying business development needs and the additional funds required. It is also important for entrepreneurs to conduct trials and calculate their monthly income and expenses. This way, entrepreneurs can determine the appropriate loan amount needed.
Ida also suggests getting to know the bank from which the loan will be taken. "After determining the required capital, consider the bank you will choose carefully. It is advisable to choose a bank with lower interest rates to avoid burden when repaying," she said.
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Once the loan is approved by the bank, there are financial responsibilities that entrepreneurs must fulfil, such as paying installments before the due date. This is where financial management is crucial to avoid defaulting. The availability of funds for installments should be prioritized.
According to Ida, in the process of managing business finances, it is important to create and record a business budget. This includes the total loan funds, bills, profits, and monthly expenses. By keeping meticulous records, entrepreneurs can assess which expenses should be reduced or increased.
"Moreover, this is also useful for avoiding the risk of default or fines due to late payment. With proper bookkeeping, we can track the remaining loan funds, loan tenure, and how much needs to be allocated each month to repay installments," she explained.
Furthermore, it is important to utilize profits from the business. Profits should be allocated to business development, such as increasing the number of outlets, employees, products, and services. Additionally, profits can be set aside to pay installments in the following months.
"Do not assume that a business will always thrive. Therefore, continuous innovation in business development is crucial to anticipate possible downturns. This is also to avoid being trapped in efforts to repay installments," she concluded. (lai/wil/fajr)
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