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The Secret To Negotiating With Creditors Like A Pro
By Christopher Lee
So many businesses these days are saddled by overburden some debt, and when debts go unpaid negotiation with creditors becomes a necessary tool for a debt-laden business to survive. Whether you do it on your own or hire a professional, skilled debt negotiators save businesses real money. However, some business debt negotiation succeeds and some fails. Why?
The secret to succeeding in business debt negotiation is in understanding how to best position a debt-troubled company to negotiate a fair-minded settlement with creditors. The use of proper positioning will impress creditors and promote reasonable settlements. Failure to position a company properly will put it at a significant disadvantage with creditors, dooming it to a negotiating “rut”.
In positioning a debt-troubled company, the primary types of variables that are relevant for effective debt negotiation with creditors are economic, credibility, legal, and collection history. Understanding how to use these variables correctly allows a company in serious debt to create a strategy to win the debtor/creditor “negotiation game”. Sound interesting? Read about the variables below.
Economic Variables. Economic variables consist of effective communication and documentation with creditors regarding current cash flow, future earnings potential, assets, guarantees, outstanding business debt loans, security on any debts, liens, judgments, etc. A good negotiator needs to consider that some creditors are in deep need of their money, while others have deeper financial reserves. Proper use of the economic variables results in an informed and interested creditor who is most receptive to communications and offers. Negotiators also need to be prompt and honest. Negotiators who are not knowledgeable about the details of the business they are negotiating for are lost!
Credibility Variables. Having clear goals and adequate resources to settle debts are instrumental. But the best laid plan will be useless without creditor cooperation. This takes a credible negotiator. Open communication with creditors has to be correctly managed by negotiators. High quality information, current information, and frequent communications
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need to be exchanged and maintained in order to reach equitable debt settlements. Broken promises in the past, lack of clear goals or a clear reorganization plan, unanswered inquiries, etc. damage credibility and slow the process. Negotiators need to maintain creditor respect, and reestablish the credibility that has been lost by the debtor. Legal Variables. Every creditor and collector has a wide range of legal options in trying to collect their money--everything from doing nothing to winning a judgment and seizing assets. A good negotiator knows each creditor’s exact position in the collection process. Negotiators know that creditors will be considering, among other things, whether or not the debt is in suit, if the debt is disputed, if the debt is secured, if bankruptcy has been filed or contemplated, if they are the original owner of the debt, the collectability of the debt, etc. Negotiators should always factor in the costs of legal action in their analysis. Collection History Variables. The history of a debt account is important to the creditor's collection stance. Variables such as prior collection efforts, the number of prior collectors, the age of the debt, prior offers and demands, etc. help creditors decide how to proceed. Some collectors have set rules provided by creditors for collection, while others have more internal flexibility to fashion settlements and solutions. As a negotiator, try to gather information about the creditor’s limits, payout terms, willingness to settle, etc., while maximizing the use of the collection history data to turn the creditor towards a reasonable solution. The above list of variables is not meant to be complete, and there are secondary variables (the discussion of which is beyond the scope of this article) that can come into play during negotiations. The negotiator’s strategy is to use the above variables as a “system” to provide creditors with lots of accurate information about the business’ problems, so that the creditor will be most informed of how dire the cash flow is, how burdensome the debt load is, how repayment cannot be made, how operating expenses are not being met, etc. Typically, there will be two outcomes. Creditors will either agree to settle debts for less than is owed, or they will agree to extend the time in which they are paid. Either way, an efficient debt negotiator will allow a business to allocate more resources towards increasing revenue, as opposed to wasting resources on debt load it cannot pay. Which option a creditor decides to take is dependent on each particular debt and each particular creditor. There is no steadfast rule as to what a creditor will do. Some debts are just recently delinquent, while others have been through litigation and have judgments entered. Some debts are unsecured, while others have an asset pledged against them in case of default. Some creditors are in deep need of the money, while others have deeper financial reserves. Good debt negotiators will balance creditor “wants” with debtor “needs”. Mastering the debt negotiation process begins with understanding the "ins and outs" of these factors. Using the strategy mentioned above will certainly influence a creditor’s decision-making process, potentially saving a lot of money for debt-strapped businesses. Article Source: http://articlecrazy.com RESOURCE BOX :
This article was written by Christopher M. Lee, vice president of www.debtassociates.com”>Debt Management Associates, Inc. Mr. Lee has 18 years of debt negotiation experience. For more information, go to www.debtassociates.com.
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New mobile site, billboards to promote N.C. wineries
<img src='http://assets.bizjournals.com/triad/blog/2012wine_mobile1*100.jpg?v=1'>Now this is something we can toast.
The N.C. Tourism Office has added some new tools to help draw visitors to the state?s more than 100 wineries.
A new mobile website, visitncwine.com, is designed to help travelers using their mobile devices. It includes descriptions, directions and photos for the wineries and gives users the ability to search for wineries and events by proximity and region.
The state has also created a a pocket-size brochure that provides maps and winery listings and is available at state Welcome Centers and wineries across the state...<div class="feedflare">
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</div>Does Caterpillar like N.C. better than Illinois?
<img src='http://assets.bizjournals.com/triad/print-edition/post-caterpillar_inside1-print*100.jpg?v=1'>What looks like bad news for Illinois could be good news for North Carolina.
Our sister paper, the Triangle Business Journal, writes that officials with Caterpillar, based in Peoria, Ill., have told Peoria County officials that they intend to build a a 1,000-employee plant to make tractors and hydraulic excavators closer to its division headquarters in Cary.
Why? Because Caterpillar officials continue to have ?concerns about the business climate and overall fiscal health of the state of Illinois...<div class="feedflare">
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</div>SBA head to speak at UNCG
<img src='http://assets.bizjournals.com/triad/news/post-Mills-Karen-Gordon-315X309*100.jpg?v=1'>The head of the U.S. Small Business Administration will speak Feb. 15 at UNC-Greensboro.
Karen Gordon Mills, will give a presentation on ?The Path to Entrepreneurial Success: Capitalizing on Opportunities and Resources? and will take questions from local entrepreneurs after her presentation. The event also includes a panel discussion with local entrepreneurs.
Mills? visit to UNCG is part of a tour of U.S. colleges and universities. Mike Tarrant, UNCG?s director of strategic initiatives, said in a statement that Mills was drawn to UNCG because of entrepreneurship initiatives such as the N...<div class="feedflare">
<a href="http://feeds.bizjournals.com/~ff/bizj_triad?a=AMti5fpmcoA:tmPHvgsojKQ:yIl2AUoC8zA"><img src="http://feeds.feedburner.com/~ff/bizj_triad?d=yIl2AUoC8zA" border="0"></img></a> <a href="http://feeds.bizjournals.com/~ff/bizj_triad?a=AMti5fpmcoA:tmPHvgsojKQ:V_sGLiPBpWU"><img src="http://feeds.feedburner.com/~ff/bizj_triad?i=AMti5fpmcoA:tmPHvgsojKQ:V_sGLiPBpWU" border="0"></img></a> <a href="http://feeds.bizjournals.com/~ff/bizj_triad?a=AMti5fpmcoA:tmPHvgsojKQ:F7zBnMyn0Lo"><img src="http://feeds.feedburner.com/~ff/bizj_triad?i=AMti5fpmcoA:tmPHvgsojKQ:F7zBnMyn0Lo" border="0"></img></a> <a href="http://feeds.bizjournals.com/~ff/bizj_triad?a=AMti5fpmcoA:tmPHvgsojKQ:qj6IDK7rITs"><img src="http://feeds.feedburner.com/~ff/bizj_triad?d=qj6IDK7rITs" border="0"></img></a>
</div>Thomas Built Buses stepping up production, adding workers
<img src='http://assets.bizjournals.com/triad/post-102W-Kelley-Platt*100.jpg?v=1'>High Point-based Thomas Built Buses is ramping up production and adding positions to help the company fulfill orders of its Saf-T-Liner C2 school buses for the state of North Carolina as well as other customers.
The hiring of 50 new employees is partially related to the company?s move to recall 125 workers due to increased demand for the C2 school bus.
Company officials did not have a specific number, but said the majority of the 125 positions were filled and that their recall list has been exhausted...<div class="feedflare">
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In biology, mediation is the action of an intermediary substance called a mediator.
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