Talk To Your Creditors To Help Your Business

Don\’t Hide, Talk To Your Creditors

The economic troubles that rattled the world\’s economies a few years ago have had a terrible impact not only in Europe but also all over the world. In Great Britain, small companies have declined as consumers have cut back on expenditures and financial institutions have been stricter about lending qualifications. If you own a company in the UK you may still be feeling the effects of the financial crisis that has been giving you trouble with paying the bills. If this is the case, one of the worst things you can do is to run away from your responsibilities. This never solves the problem, and truthfully, it makes the situation even worse. You are better off making a deal with your creditors and devise a payment plan that you both find acceptable.

What About The Creditors Situation?

When business owners run into financial trouble they are often so overwhelmed by their own problems that they don\’t consider the situation their creditors might find themselves in. Realise that you may be just one of many clients having trouble paying a particular vendor. If all of those clients simply walk away from their debts, that vendor may also find himself in serious enough trouble that his own existence is threatened. Your creditors, in most cases, we will be willing to work out some sort of mutually beneficial arrangements so that both of you can stay in business.

Make An Honourable Deal

Some individuals state that the key to making great deals it to gain and keep the position of power. This is not always true. More vital than the position of power is your desire to make a deal in good faith. Making a deal in good faith implies that both people will be straightforward in talking about their financial position and what they can realistically afford to do. As the individual in debt, it is important that you do not present a good offer to your creditors that you may not be able to meet later on.

For the purposes of a simple illustration, let\’s say that you owe a creditor 10,000. If you assess your financial situation and believe that you can make payments on that balance of 1,500 per month, provided nothing else goes wrong, don\’t offer your creditor that amount. If you do, and something else does go wrong, you will have damaged the good faith you established during negotiations. Instead, offer him 1,000 per month. If you can afford to pay extra in any given month then that will only serve to strengthen your good faith promise.

Steer Away From Adding To What You Owe

If it becomes necessary for you to negotiate with creditors, it also becomes equally necessary to avoid accumulating any more debt. It does your business no good to negotiate with one vendor while continuing business as usual that simply increases your debt with others. All you\’re doing here is transferring your debt for one creditor the next. Obviously, it doesn\’t solve the problem. Find ways to reduce business expenses and increase cash flow, so that as your restructured debts are paid off, the business goes from the red to the black.

Making a deal with creditors is a much better choice than running away from your debts or just avoiding tem all together. With a properly structured payment option, and a bit of effort, you can get your company out of financial troubles and back to making money. If you avoid the situation you are just accepting defeat.