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How To Reduce Debt in a Food Supply Business

Is your food and beverage business struggling to keep on top of your debt? If the answer is yes, then you are probably concerned that things could quickly spiral out of control and that can be a frightening experience. We know that debt can fatally impact a small business. But the good news is it doesn't have to be that way. We've put together some practical tips on how you can reduce your debt, so you can keep your business doors wide open and continue doing what you love.


Ken Thomson, co-founder of the small-business debt management firm Biz911, suggests that you “identify the parts of the business that got the company into debt in the first place and attack them head on”. For example, one part of your business that could be carrying a lot of debt is your production process. If you find yourself wasting or overspending money on producing your goods this can have ramifications for your cash flow. Ensuring that your production process is seamless means that your goods are produced accurately and of the same quality every time. Not only does this prevent wastage but it also means your customers can trust that they are going to consistently receive a high quality product that meets their expectations (and of course that of their customers!).

You could also take a look at your other daily processes and consider moving them online. Leveraging digital tools for order processing, invoicing, and inventory management will automate your workflow, preventing you from costly production mistakes and data entry errors, as well as having to rely on expensive people-power. 


Similarly to managing your cash flow, reducing debt also means cutting down your business’ expenses so you can free up money that can be used to pay off your debts. For example, as a bakery supplier you probably have a lot of accounts payable: loans, staff payroll, inventory, transportation costs, and packaging, to name just a few. The trick is to figure out which of these expenses you can reduce or eliminate all together. In other words, take a good look at all your outgoings and cut back on anything that isn’t business critical.

Most small food and beverage businesses today use traditional spreadsheets to view and monitor their expenses. This can be effective but can also be very time-consuming so you could consider investing in a good accounting system. Whilst there is an initial set up cost this kind of system will enable you to easily keep a close watch on your monthly expenses and outstanding debts.


Your break-even point is defined as the moment when you’re covering all your expenses but aren’t making any profit. It can act as your “target” since it lets you know how many products you need to sell in order to break even. For example, how many orders for blueberry muffins do you need to receive to cover your production costs. Once you start selling products beyond your break-even point, you will begin generating a profit.

The key here is to have a break-even analysis that is as solid as possible. This will tell you where you need to reduce business expenses and cut costs, and when you need to tweak your product prices so you can have more money coming in to get on top of the debt you owe. Business Queensland has an interactive calculator that you can use to find your business’ break-even point.


Having more cash on hand means you can pay off what you owe and even have sufficient cash reserves for unexpected expenses and uncontrollable circumstances like extreme weather and sudden price changes within your relevant sectors.

There are many ways to increase your income as a food supplier. For instance, you could tap in to current industry trends and add more unique products to your inventory. You can also upsell and cross-sell your existing products. This is an effective tactic that is made easier if you have an online store or a digital catalogue where you can highlight special deals and limited-time promotions through the ordering interface. One clever function of the B2B ordering tool Ordermentum is that you can create a digital product catalogue that will enable you to promote your entire product range and create special offers for specific customers. 

Working out how to pay off your business’ debts can be intimidating and quite stressful. But the good news is there are always positive steps that you can make to get your business back on track. If you think you need more help then feel free to get in touch with Ordermentum today.

Want to read more industry insights like? Head over to our blog.

Avlya Jacob

Avlya Jacob is a content writer at Ordermentum. When not working, she enjoys writing online novels and spending time with her husband.

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