It is often believed that in times of uncertainty or economic crisis it is best to pay off debts so as not to have to have money on a monthly basis that, in theory, could be used to meet other obligations such as salaries, rent, among others.
And it is that, although it is true that there are occasions in which paying a debt in advance is usually the best option, there are others in which the advance payment of a credit can lead to liquidity problems in the future.
Thus, the first thing that must be taken into account when making this type of decision is to review the current characteristics of your company’s credits, so that you can analyze which ones you could keep, which ones should be renegotiated and which ones it is better to settle in advance.
Another element to take into account when deciding the early settlement of a debt has to do with the rate.
Is it worth paying the entire loan?
Once you have reviewed the current characteristics of your company’s credits, you will be clear about whether it is at a fixed rate (the rate does not vary in the face of changes in the market) or at a variable rate, that is, it is indexed to factors such as inflation. , DTF, UVR, among others, which in a context like the current it implies that your company is paying more and more for the same loan.
Now another factor to consider, and perhaps the most important, It is the one from the box of your company. Analyze if the early payment of these credits will significantly reduce your resources on this front or if, on the contrary, you will still have significant money.
This is essential because in times of uncertainty or in the face of a possible recession, the best that companies can have to Being protected against unexpected events is enough liquidity and money in the box.
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In this way, if the payment of credits leaves your company without cash, it is best to avoid it in order to be better positioned against any adversity that may arise, such as a decrease in income due to lower sales.
Always keep in mind that a robust box can become the lifeline of your company during difficult times.
On the other hand, it is important to check if cheap debts have been acquired, because at a time when rates are rising exponentially like the current one, windows of intermediation of rates are opened, in which your company can obtain returns by placing those resources , giving you more profitability than previously acquired credits.
Thus, if you have loans at low rates and have the cash to cancel the loan, before doing so it is advisable to study the investment alternatives, it is possible that you will find investment options today that cover the cost of the loan and, in addition, additional yield remains.
In any case, it will always be best to seek advice from financial experts, who will guide you along the way to make a more informed decision that is of greater benefit to your company.
