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What Is a Business Debt Schedule?

As a business owner, you’re likely to have some debt on your books, whether that means loans, leases or contracts. It’s very wise to ensure you have easy access to all the details of those debts, and a business debt schedule is the best tool for doing so.

There are many reasons that listing out your debts is a good idea. For one, it’s essential to make all your payments on time — neglecting to do so can have a very negative effect on your credit and your business prospects. Having all your debt listed in one place also allows you to make better strategic decisions about managing your outstanding debt and potentially taking on new small business loans. Potential investors or buyers of your business will want this information as well; maintaining an up-to-date listing of the details is the best way to make sure you always have it on hand.

A solid way to keep accurate and comprehensive records of your business debt is to develop and maintain a business debt schedule, which lists the pertinent information about all your business’s outstanding debts.

What is a business debt schedule?

This info-gathering tool allows you to collect, review, analyze and plan for repayment on your business’s debts. Its most basic function is to let you easily see your entire debt load and monthly payment requirements. Having this overview is also essential for strategic decision-making; you’ll be able to create an informed plan about how and when to pay off certain debts and whether to acquire new debt. You’ll also be able to use the chart to easily provide long-term projections to investors and creditors.

Businesses can use a debt schedule to create a cash flow analysis — interest expenses listed in the debt schedule are incorporated into the income statement, the closing debt balance is listed on the balance sheet, and principal repayments impact the cash flow statement. The debt schedule connects these three essential financial documents.

Types of debt found on a debt schedule

All business-related debt should be included on your business debt schedule: loans, leases, contracts, notes payable and any other things you are contracted to pay periodically. Expenses that fluctuate with the day-to-day running of your business, such as accounts payable, are not usually included in the debt schedule.

What’s included on a debt schedule?

A debt schedule must include details of every debt so the spreadsheet can provide a thorough assessment of all the variables. Including every aspect of the debt allows for informed decision-making about how to strategically manage business debt. Details that are likely to be found on a debt schedule include:

  • Creditor or lender name
  • Origination date of the debt
  • Original debt amount
  • Current balance
  • Interest rate
  • Monthly payment
  • Security or collateral
  • Maturity date

The form may also include notes such as the reason for the loan or other information pertinent to the lender or the repayment process.

Example of a debt schedule

A typical debt schedule is a chart that lays out all the information you need to track for the loans you have. There are many good templates online. Here is an example of how line items on this chart may look:

Creditor Original date Original amount Balance Interest rate Monthly payment Security Maturity date Reason for loan
Bank 1 1/1/15 $50,000 $23,585 4.5% $518.19 Home 1/1/25 Remodel office
Bank 2 9/1/17 $5,000 $3,152 5.5% $150.98 Equipment 9/1/20 Equipment purchase

 

As you can see, a schedule like this must be kept up-to-date; updating it at the beginning of each month is a good way to make sure it stays current. It’s also important to remove old debts that have been fully paid from the spreadsheet to ensure you’re only looking at what you actually owe at any given time.

Why businesses need a debt schedule

Keeping a debt schedule is an important part of managing the financials of a business. It’s useful to get a bird’s-eye view of all your debts and to analyze your current payments and future financial obligations. There are a variety of ways that keeping a debt schedule may benefit your business; it can help you with the following essential financial management tasks:

  • Stay current with debt payments: This is one of the debt schedule’s most important functions, since there is little worse for your business finances than paying your debts late, or worse, forgetting to pay them entirely. This spreadsheet lets you see all the amounts that you owe each month, at a glance.
  • Keep your books accurate: Bookkeeping can get complicated when you have multiple debts of various kinds. Having all the information about them at your fingertips is a good way to make sure everything is lining up. Ensure that your debt schedule matches your other bookkeeping methods.
  • Negotiate better rates: When you’ve established a record prompt payment on an outstanding loan, you may be able to negotiate for a better rate through a refinance. The debt schedule lays out which loans you’ve been paying off for a while and which have the highest rates and monthly payments. This is information that can help you target your refinancing efforts.
  • Forecast your financial obligations: Putting all your debts in one place allows you to quickly see how much you owe every month to your creditors. It can be a way to gut-check how much you can afford to outlay on a need expense or whether new borrowing is feasible. It will also be immediately clear when you can expect financial relief as each of your loans is paid off.
  • Strategize payments: A debt schedule can help you see the strategic benefit of paying certain debt off early. You can assess which of your debts to pay off first if you have the means to fast-track any of your repayments.
  • Make borrowing decisions: Knowing whether you can afford to borrow more depends on knowing how much you already owe overall and are due to pay each month. If a potential new loan doesn’t fit into this financial picture, you’ll know right away if you should hold off until your financial picture improves.
  • Provide accurate information: The data on your debt schedule can be used in various ways to inform potential new lenders, creditors and prospective buyers about the financial details of your business. Having this data in one place helps you pull the appropriate informative reports easily.
  • Monitor your business’s financial health: The debt schedule is a key part of the larger picture regarding how your company is faring financially. If the totals for balances and monthly payments are too large, you’ll be able to see that immediately and figure out a plan to bring those numbers down.

The bottom line

A debt schedule can be extremely useful, but only if it’s kept up-to-date with current information. You should refresh the information on the sheet regularly — it takes some time and organization to refresh it often, but doing so will save you hassle and ensure that the necessary information is always ready when you need it.

Taking the time to put together a debt schedule will ensure that you are armed with all the information you need to manage your finances successfully, whether you need to pay down your debt, add new borrowing, or communicate with investors or creditors.

 

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