Are You Being Crushed by Debt?

By Adam Litster, CPA — Better Biz Info · Originally shared with subscribers of The Profit Shift.

Debt, Tool or Trap? Understand the Difference Before You Sign

Why talk about debt now?

With inflation still seesawing and tariffs changing overnight, many businesses feel their cash cushions evaporate faster than expected. We’ve noticed a sharp rise in owners tempted by instant online loans or credit card floats just to cover payroll. Quick cash can feel like relief, until the payments arrive and profit vanishes.

When a payroll loan becomes an anchor

One client had run lean and profitable, until discipline slipped. Profit and tax transfers paused, expenses crept up, and a sixty thousand dollar payment from their largest customer came in late. Payroll was due Friday. A Stripe cash advance offered funds in minutes. Perfect, the owner thought, I’ll repay as soon as the customer check clears.

The check cleared, urgent bills swallowed it. The Stripe balance lingered. A second loan covered taxes, a credit card swipe paid rent, and soon monthly debt payments were the company’s biggest expense. Stress and sleepless nights followed, proof that the quick fix had become a long term burden.

The three flavors of debt, know what you’re signing up for

Debt isn’t inherently wrong, but its impact depends on why you take it and how it will be repaid. Before borrowing, identify which bucket the loan falls into.

Freeze, reserve, eliminate, a principle based plan

1) Freeze new borrowing and slash non essential spend

2) Build a timing reserve, be your own bank

Open a separate account labeled “Timing.” Transfer 2 to 5 percent of every customer deposit into it. Within a few months, you’ll have cash to cover material purchases, slow receivables, or minor emergencies, without a lender’s fee attached.

3) Eliminate debt with the snowball method