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How to make a debt schedule for your business

Posted by Deepshikha Shukla

July 20, 2022    |     4-minute read (687 words)

A business debt schedule may sound complicated, but it is essentially just a spreadsheet of your company’s monthly long-term debt obligations, often arranged in order of the nearest-term due dates.

The chief benefit of the debt schedule is it gives business owners simple access to the details on its debts, which is imperative considering most debts entail a regular monthly payment and accrue interest. 

Frequently, but not always, used only internally within a company, the business debt schedule is often used to create cash flow analyses and to make informed decisions about paying off debt. 

What you need to build a debt schedule

When constructing your business’s debt schedule, your goal is to list all its current long-term repayment obligations. 

In this situation, short-term debts refer to regular expenses that mature in less than one year — such as short-term accounts payable — and these are usually not included in a business debt schedule. 

Instead, your business debt schedule comprises its long-term debts, such as loans, commercial paper and leases for things like equipment and transportation, for which the payment obligation is at least a year in the future. Typically, long-term debts have a lower monthly payment but higher total debt because of accrued interest on a large principal amount.

These four types should go into your business debt schedule:

• Loans.
• Leases.
• Bonds or contracts.
• Notes payable.

Populating your business’s debt schedule

You can prepare a business debt schedule using a simple spreadsheet program, such as Excel or Google Sheets. You may also use accounting software or an outsourced bookkeeping or accounting provider.

For each of your business’s long-term debts, you will be entering the pieces of information listed below into your spreadsheet or to build your debt schedule. It is a useful way to understand the details of your loans and to be strategic about how you manage them.

Note that many accounting professionals recommend listing your debts with the closest-term due dates at the top. 

List these details for each long-term business debt:

1. Name of the creditor or lender. 
2. Original loan amount, excluding any interest.
3. Current balance.
4. Interest rate, and whether it is variable or fixed.
5. Monthly payment amount.
6. Due date.
7. Loan term.
8. Maturation date.
9. Collateral pledged, if applicable.

Six uses for your business debt schedule

A business debt schedule can do more than simply chart your liabilities. You can tap into your debt schedule to:

Create a debt repayment plan.

  Having your monthly debts organized in a single sheet can make it much easier to visualize a repayment plan. By knowing your bills' due dates, you can assess the benefit of paying certain debts off early. You can also better evaluate monthly cash flow and align your payments to ensure you make each due date.

Stay current with payments.

Use the debt schedule to track the total amount you owe each month, your ability to repay debt and the right time to apply for a loan. 

Negotiate a lower interest rate.

The debt schedule shows you immediately which loans have the highest interest rate. Businesses with a history of timely loan payments may be able to negotiate a lower interest rate, giving you the chance to optimize your payment strategy by refinancing your debt.

Prepare accurate forecasts.

Easy access to the business’s commitments and variables via the debt schedule makes it simpler to create accurate business forecasts.

Make better borrowing decisions.

  Business needs can change quickly when the market shifts. Before deciding whether to take on more debt, you can check your debt schedule to evaluate existing debt and monthly payments.

Provide accurate information.

  Your business debt schedule can provide potential lenders, creditors and buyers with insights about the health of your company based on its debt situation. 

The bottom line

Maintaining an accurate business debt schedule lets you monitor your business’ financial position, keep its financial data organized and stay on top of debt payments. It can also help you to prioritize which debts to pay off fastest and to decide whether you should take on more debt.

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