DEBT MANAGEMENT STRATEGIES IN BUSINESS PRACTICES

WITHIN SAN MATEO, RIZAL

A Research Study

Presented to the Faculty of

College of Business

And Accountancy

In Partial Fulfillment of the Requirements for the

Degree of Bachelor of Science in Accountancy

Ariola, Diana R.

Agudes, Japhet G.

De Guzman, Jb Emanuel T.

Decena, James M.

Matore, Jerald L.

Osinsao, Jullie Anne

Pantinople, Raymond A.

Pitong, Desireen B.

September 2020

CHAPTER I
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 THE PROBLEM AND ITS BACKGROUND

INTRODUCTION

Debt management refers to an unofficial agreement with unsecured creditors for

repayment of debts over a specific time period, generally extending the amount of time

over which the debt will be paid back. Under debt management, the creditors are

offered a Statement of Affairs (SOA). Through this, your disposable income, as

estimated by the debt management company, will be proffered to the creditors and they

will decide on whether to agree to it or not. Once agreed upon, you are supposed to pay

regular installments to the debt management company. These installments are then

distributed amongst your creditors thus making it easier for you to repay your debts.

Debt management for business should never be looked upon as a measure to

wipe out debts. It is aimed at providing relief to creditors to the extent that the unwanted

stress that had built up is reduced or removed. In a way, debt management is the

method of creating elbowroom for business finance that makes maneuvering of finances

quite easy without affecting the business operations. The professional debt

management company will work out ways to ensure that the most painful loan element

is taken care of. The solution that they provide would primarily consider how much

suitable it is for you and would also take into account how well it can sustain the

business.

Debt management is an opportunity for those who are facing a short-term cash

flow problem and believe that their financial position will change in the near future. And

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also for those who want to do away with the pressure from creditors and want to pay off

all their debts but are struggling with their present repayment schedule.

There are several advantages of a debt management. One of those is the

flexibility of debt management that implies that with changing circumstances, the

employed plan for debt management can be altered accordingly. Debt management

also reflects your responsible attitude towards your debts, which might be looked upon

favorably by the prospective creditor and may become your business strength. And

lastly, there are no contracts with the debt management company thus enabling you

walk away and make alternative arrangements at any point where you are not satisfied

with the services.

Arriving in an effective debt management plan requires a good strategy which

may come in various form that can be implemented to accelerate wealth accumulation

involving cash flow, repayment and consolidation. A good strategy on debt management

is the key to a sound debt structure.

In general, this study focuses on providing useful information regarding the

different strategies used to make a sound debt management plan and the effectiveness

of the strategies of debt management plan in the business practice of the businesses in

San Mateo, Rizal.

BACKGROUND OF THE STUDY

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 Nothing can be as relieving as settling debt for most businesses, especially those

that are deeply immersed in a myriad of debts. Debts can be quite stressful, and this

can lead to other problems such as financial related complications and sometimes even

bankruptcy. As a result, the importance of debt management cannot be

overemphasized. There are several debt management options available. The most

successful strategies mostly employ the services of professionals. With the input of

professionals, most strategies tend to focus on debt relief and personal finances. A debt

relief company can assist a debtor to get rid of the debt, while financial advisors and

credit counselors are helpful in getting individuals to be in control of their finances,

financial habits and debts.

Debt management is a unique strategy developed to help a debtor manage their

debt. This strategy is usually developed and implemented by an outside company or

organization on behalf of the debtor, usually because the debtor is unable to sufficiently

manage their debt on their own, due to lack of knowledge or because they are

overwhelmed by the amount of debt.

Debt management is an important aspect of ensuring a better quality of life,

particularly because effective management of debt means less stress for the individual.

It’s easy to get into debt, but it can be painfully difficult to get back out. Everyone who

pays off their debt does it a different way. They often combine strategies to chip away at

their debt, and they stick with those strategies until the debt is gone.

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 In further information, the researchers will conduct an study and understand how

debts in businesses in San Mateo, Rizal limits their financial choices and how a wide

range of strategies can help control, reduce, and eliminate their debts.

THEORETICAL FRAMEWORK

Debt management is a way to get debt under control through financial planning and

budgeting. The goal of a debt management plan is to use these strategies to help

business lower the current debt and move toward eliminating it completely.

A business can create a debt management plan for themselves or go through credit

counseling to help the business with its plan. In this study, the researchers will use the

different proven debt management strategies. These methods or strategies are Debt

Snowball Method, Debt Avalanche Method, Debt Consolidation and Debt Settlement.

Dave Ramsey, an American businessman, was the proponent of Debt Snowball

Method. The rest were developed in last few decades.

This research presents the graphical presentation of the conceptual framework of

Debt Management Strategies in Business Practices within San Mateo, Rizal. It

shows the input of snowball, avalanche, consolidation and settlement. The process

refers to the methodology of gathering and presenting the data. The output refers to the

recommendations of effective debt management strategies towards other businesses.

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CONCEPTUAL FRAMEWORK
INPUT
Debt Management
in Business
Practices within
San Mateo, Rizal
1. Snowball
2. Avalanche
3. Consolidation
4. Settlement
Impact of Different
Debt Management
Strategies
Figure 1. Conceptual Framework of Debt Management Strategies in Business
Practices within San Mateo, Rizal
STATEMENT OF THE PROBLEM
PROCESS OUTPUT
Assessment of
Debt Management Effectiveness of
in Business Debt Management
Practices within in Business
San Mateo, Rizal Practices within
through: San Mateo, Rizal
Conducting an
interview using
questionnaire
Recommendations
is to inform and
provide effective
debt management
Statistical Analysis strategies towards
and Interpretation other businesses in
of data gathered San Mateo, Rizal
FEEDBACK
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SCOPE AND LIMITATION

This study focuses on the Debt Management Strategies of Business Entities

within the area of San Mateo, Rizal.

The data collection will be conducted through observation on textual and visual

analysis and secondary researches as reference for its existing data.

This study will cover short and long term debt management of business entities

but limits only in San Mateo, Rizal premises.

By the strategies of researchers through qualitative, they will be able to know

how business entities in San Mateo do, Rizal manages their debt.

SIGNIFICANCE OF THE STUDY

The researchers believe that this study will widely help to the following different

individuals:

Teachers: This study will help the teachers to provide their students the

knowledge about how to manage debts in business practices. This will also help their

students and themselves to understand the value of money in order to handle finances

better.

Students: The importance of this study to the students is to help them obtain

knowledge about the short and long term strategies how businesses manages their

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debts. This will also help the students to empower their financial planning especially for

the Business and Accountancy students.

Researchers: The importance of this study is for the future researchers to help

them serve this study as a guide of their own research that has connection in debt

management relating to business practices.

Administrator: This study will help the higher officials to obtain insights as to

what measures are appropriate to help the teachers orient both students and teachers

regarding debt management in business practices.

Writers: The significance of this study is to serve as basis or guide for writers in

their future article that has relevance in the topic.

Individual: This study will help every person who opts to work in business and

financial field attain how is debt management in business practices done.

Entrepreneurs: The entrepreneurs can use this study to serve as a guide or

provide them how other entrepreneurs practices their debt management.