Debt Analysis and Management

Debt Analysis and Management

It is very important to document, understand, and analyse the debts to be handled.

Debt analysis is the paramount step to find the solutions.

Debts have to be classified into unhealthy and healthy debts.

For a broad understanding:

Healthy Debts are productive and help growth

unhealthy debts are unproductive and mostly related to the misadventures of the past

Most of the Debt issues are unresolved, just because they are not well understood.

In a nutshell debts have to be studied thoroughly, nature of the Creditors, their needs, the reputation of the client with the creditors, and the stage of the respective Debts and negotiations, if any.

It is imperative to understand, analyse and prioritize the debts in the order they can be paid off.

temptation to create more debt , whatever be the scenerio has to be avoided. When you continue adding debt while you’re paying on oneside, hardly any progress is made, if you make any progress at all.


Though these won’t get you out of debt, but, at least your debt won’t get worse.

If you’re only paying the minimum on your debts, it will take the longest time to get out of debt. By the time you finally pay off your balance with minimum payments, you’ll probably have paid double or even triple what you originally received. Hence you will have have to work out ways and means of paying as high as possible without losing control over the existing operations.

Debt Management Planning

After the Debt analysis, a detailed has to be done to understand the cash flow. Intervention is needed where ever required to improve the cash flow to meet out the planned repayment.

The Planning has two components:

• Planning with the current levels of earnings
• Planning with estimated earnings for the period of repayment to clear off the debts in toto.

At this stage, the implementation has to be planned at length, and the roles and responsibilities of the stake holders have to be clearly chalked out.