Is your business drowning in debt? Are you seriously contemplating bankruptcy? Although attornies often recommend bankruptcy as a way to stop the pain, it is not always the best solution. If you have provided lenders with a personal guarantee, you are still liable and can lose everything you have. No one wants to give up everything they’ve been working for. But there comes a point in time when it gets harder to avoid bankruptcy. You have to protect your assets be it personal or business. These questions are addressed when opting to negotiate and settle your business debt. Avoid bankruptcy and deal with your creditors. Most creditors would prefer to take something rather than risk their debtors entering bankruptcy and having nothing to pay them.
The first step is to let your vendors and creditors know your financial situation as well as the cause of the problems. Being honest and open with them about your situation helps the chances of your problems being solved rather than hiding it with no chance at all to be remedied. Communicate with the people you owe money, explain your problems and they will understand and respect you for your honesty. Your honesty gives them fair chances to get back what you owe them. It makes them more willing to reduce and negotiate your debts down to a level you can afford.
Hard work spells out trust from your suppliers to give you the best deals for your supplies and raw materials. Considerable terms are extended to hardworking businessmen for even suppliers themselves are businessmen who try acquire dependable clients. Suppliers know that it is much easier to keep an existing customer than to acquire a new one. Also, suppliers know that customers will appreciate the suppliers’ patience and remain loyal to them in the future as gratitude for their help. Obtaining favorable payment terms on your outstanding business debts helps keeps more money from flowing out of your business each month, and keeps your business moving until you can turn it around. Negotiate with vendors to reduce debts or suspend payments to them for a certain time until your struggling business comes back to life.
Negotiating business debts is a thing you could master over time but it is worth starting now. Contact your creditors and convince them that by reducing your debt, you will be in better shape to pay them and it will allow you to continue with the business. At the end of the discussions, vendors should believe that you have a good chance to stay in business and will pay them sooner than expected if your business would recover through better cash flow assisted by the easy terms agreed with the creditors.
Negotiation not only yields favorable results, collection calls are also reduced which is to the creditors advantage by minimizing agony of futile collection efforts and saving on resources. Negotiation and reducing business debts is the best alternative for all sides. (askthecfo.com)