Don’t Hide Your Head In The Sand: Talk To Your Creditors!
Companies run into debt problems all the time. You gamble on an investment of time and money, and every so often you lose out. Startup businesses have to gamble capital and debt in the hope of generating an income – not all succeed on the slippery pole. The worst thing you can do in these circumstances is hide from the creditor, and the best thing you can do is talk to them.
Hiding your head in the sand?
About the worst thing to do in these circumstances is to try to hide from the creditors. You’re not the first debtor and won’t be the last – they have very good processes (from their perspective – you won’t find it pleasant at times) for getting their money back.
In accepting their calls and dealing with them they shouldn’t call repeatedly.
Work out your budget
Companies get in trouble where their outgoings exceed their income. Look at your balance sheet to assess where you could safely reduce your outgoings. In serious cases you may have to restructure your business in such a way your balance sheet returns to the positive.
On making this assessment then you can go back to your creditors with some sort of plan of action.
Communicate in writing
When you’ve missed a number of payments, creditors will often call repeatedly. According to the Canadian charity the Credit Counselling Society, the first thing you should do in this incidence is ask them to only communicate with you in writing.
This takes the personal pressure off you when receiving those calls, but also enables you to keep a record of the communications, demands and agreements made in such a way that if it goes to Court, there is nothing ambiguous in the communications between you and the creditor.
Consider hiring an expert
Where businesses go under, it is generally due to a multitude of creditors who have not been paid. Debt relief companies are experts in handling creditors and can take the pressure off you while you work at repaying your debt.
These experts will run a company review to assess your income and outgoings. They will then make an offer to the creditors of a manageable sum to be repaid.
Such companies can arrange to freeze the interest on loans for example, though this will impact on your credit rating. Remember however but they will charge a fee that will come as part of the overall debt repayments.
Once an agreement is made, then keep to it if possible. If your income takes another hit then staying in contact with your creditors should ensure that you remain trading until either you have repaid in full or decide to wind the business up.
You’re not the first and won’t be the last!
Over the last 100 years there have been several global economic downturns. Millions of businesses have had to go to creditors to ask for less painful repayment schedules. As such you’re not alone, and are not the first company to suffer from getting too much debt – however lonely you might feel when besieged with Final Demand letters.
Get the help you need, but most importantly, stay in touch with your creditors as this alone will alleviate the pressure, and enable you to focus on repaying them in a mutually agreed time.
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