As a business manager, you are shouldered with a huge role in the company. You will be focusing on different departments within the company and assigning some professionals in the field. You must learn some strategies for negotiating debt settlements with good creditors when going out of a business.
Negotiation of business debt deals
Assume that you can’t pay your creditors in full. The question becomes, how little can you settle? As you guess, it depends on the type of credit, the attitude of the creditor, and the legal details of the business and company debt negotiation settlement.
As an example, if your business is a corporation or an LLC without any personally guaranteed debts, the creditor is aware that it is not the option to collect personally. So, accepting a small portion of what the business owes as complete payment. But, if you owe a debt personally, a relative or friend consigned for it, the creditor gets more leverage.
It doesn’t matter what the status of the debts is. If you can pay 30-70% cash on the barrelhead, it is worth trying to settle them. A lot of creditors know that they will have a hard time collecting the debt. Once the business is out of business, settling the debt in a small amount will happen or even less than expected, especially when hiring a lawyer to negotiate on your behalf.
Thus, it is the reason why a lot of companies consider bankruptcy rather than being forced to pay the huge debt. However, some companies don’t want the idea of bankruptcy. Instead, they will hire a debt negotiation expert to handle the case and get a solution without hurting their pockets.
Prioritizing the debts
If you have pledged an asset you owned as collateral and you want to keep it, pay that debt first. You must pay from these options:
- Any wages
- Loans
When there is money left, then you can pay suppliers, lease deficiencies, credit card companies, and bills for the random business expenses, such as advertising, entertainment charges, travel, dues and subscriptions, and maintenance and repairs. Handle different types of creditors as mentioned below:
Negotiate with equipment lessors. You can arrange to return leased equipment, such as vehicles, machinery, and copiers. If you return the equipment before the lease term ends, no doubt, you will be liable for either an early return penalty or the remainder of the lease term payment. Negotiate a better deal while the equipment is still under your supervision.
Negotiate with secured creditors. Before turning over a property to a secured creditor, negotiate with the creditor to free you from owing a deficiency.
There is a lot of solution to deal with business and company debt negotiation. You only have to have solid financing management and debt settlement strategies to work on this concern.
