Knowledge Centre

Use debt as a tool for growth — not a trap that strangles your business.

Debt Management 

1. What You Need to Know

Debt can fuel your business — or cripple it. 
Borrowing allows you to invest in growth, equipment, or stock. But without proper planning, repayments can drain cash flow and create stress. Accountants help you calculate how much you can afford, structure repayments, and manage relationships with lenders. 

2. Why It Matters to You

Managing debt well gives you financial breathing space. 
Keeps borrowing costs under control. 
Protects your cash flow by matching repayments to income. 
Helps you negotiate lower interest rates. 
Improves your credit profile for future funding. 

3. Frameworks, Standards, or References 

Smart debt management requires financial models and compliance awareness. 

  • Frameworks to use: Cost of Capital analysis, Debt-to-Equity ratio, Loan Amortisation schedules. 

  • Standards & compliance: IFRS for SMEs (disclosure of borrowings), Companies Act (solvency and liquidity tests). 

  • References: Bank credit policies, CIBA guides on financial structuring. 

  • What your accountant will actually do: 

  • Analyse your repayment capacity. 

  • Prepare loan applications with supporting forecasts. 

  • Renegotiate terms with banks or creditors. 

  • Monitor and report on how borrowed funds are being used. 

4. How to Apply

Steps to manage debt with your accountant: 

  1. Calculate how much funding you actually need. 

  2. Work with your accountant to project repayment schedules. 

  3. Compare different funding options (bank loan, overdraft, supplier credit). 

  4. Negotiate interest rates and repayment terms. 

  5. Monitor use of debt to ensure it drives growth, not waste. 

5. Common Mistakes to Avoid 

Avoid these debt pitfalls that trap many businesses: 

  • Borrowing more than you can repay → Always project repayment schedules first. 

  • Using debt for day-to-day expenses → Reserve it for growth or investment. 

  • Ignoring interest costs → They add up and erode margins fast. 

  • Failing to monitor debt → Regularly review outstanding balances and terms.