Business Debt Negotiation | When to Consider

Being overextended with debt is stressful. It is on your mind from the moment you wake up till the moment you fall asleep. It’s an even more miserable feeling especially when you aren’t sure how to resolve it or you think bankruptcy is your only option.

Business debt negotiation is an option often overlooked, yet very effective and less stressful than bankruptcy. So, how does it work? What are the pros and cons? We will look into the negotiation of business debt in detail and compare and contrast it to bankruptcy.

Business Debt Negotiation Pros and Cons

Pros

• Less stressful than bankruptcy.
• Not as time consuming than bankruptcy.
• Less expensive than bankruptcy.
• Allows you to keep more business income for business operating expenses.
• You can focus on your business without the day-to-day stress of overwhelming debt.
• Lower fees.
• Keeps your vendor accounts in tact and in good standing.
• No negative credit impact.

Cons

• Some creditors may be difficult to negotiate with.
• Typically you will pay back the full balance.
• May not be able to negotiate a term as long as you would get through an SBA or conventional loan.

How Does the Negotiation Process Work? 

The process involves negotiations between you (or a debt restructuring comany) and your lenders. Your goal is to get payments restructured and as affordable as you can. You do have the option to negoiate with your creditors yourself, but there are some advantages in using a company who specializes in the process.

Advantages of Using a Company to Do the Negotiations For You

• Better relations with the creditors.
• Proven negotiation tactics that are more effective in getting you the most relief from your business debts.
• Can consolidate your payment with mulitple creditors.
• Will do the brunt of the work, allowing you to stay focused on your business.

There is a lot of advantage to using a debt negotiation company, but they are not all created equally. You want to do your due diligence in vetting a reputable company. Think is of the utmost imporatnce since you will be working with this company for many months or more.

How to Multiply the Positive Effects of Business Debt Negotiation

Reducing your payments through negotiation is all about freeing up cash for operating your business effectively and paying doen your debt in a manageable, not stressful way. With that said, there are ways that you can compound these positive aspects. 

• Sell off any unneeded inventory, supplies or machinery.
• This isn’t a fun one, but temporary layoffs can help.
• Finding innovative ways to streamline your processes.
• Searching out new supplier and comparing prices with your current suppliers.
• Contacting your current suppliers and seeing if you can negotiate a lower price.

All of the above probably won’t apply to every business, but some will. No matter which of the above apply, there are always ways to cut cost at least short term to get back on track financially.