Lockdown has brought a variety of challenges for businesses, one way or another related to the fact that fewer customers are making purchases. Even if you’re managing to break even via your eCommerce store, you could still have creditors on your back. After all, your previous debts are based on pre-COVID-19 lead generation and sales. Regardless of your circumstances, you should be ready to negotiate to limit the damage and give yourself more space to manoeuvre. Carry on reading to learn the basics.
By Team Savant
Image: Morning Brew on Unsplash
Explain Your Circumstances
Your circumstances aren’t unusual — you’ve been struck by the pandemic and are attempting to get the company back on track. As such, you’re struggling to pay off all your debts. Creditors may not take any notice since they are in a tight spot, too, and require every penny, yet it’s vital to put your situation in writing. Administrators will be much more forgiving if you can back up your argument because it’s not all your fault. Yes, you should have had a rainy day fund in place and a safety net, but nobody saw these circumstances coming. That should be taken into account in legal proceedings.
Don’t Push Your Luck
Creditors might be understanding, yet they won’t reward you with handouts because you have a sob story. They may afford you extra flexibility, but you should mistake this for pity or weakness. There are ways to write-off entire debts, and some companies have achieved this goal in the past. Still, as a rule, it’s smarter to negotiate reduced payments or smaller contributions over a longer period. By doing this, you can consolidate your arrears and prevent them from building up and suffocating the business in the long-term.
Deal With Creditors Over Collectors
Sticking your head in the sand won’t do you any good. All your creditors will do is offload the hassle to a collector, and that’s a different kettle of fish as they have extra powers. Armed with a county or high court warrant, they can enter the building and take anything that doesn’t come with proof of purchase. Privileged access management software is worth considering as collectors have questionable practices and PAM adds another layer of security. However, mostly, it’s savvier to deal with creditors to prevent them from reporting you to a collection agency. Once that can of worms is open, there’s no closing it.
Be Punctual
An informal payment plan won’t stop them from reporting you to a collector in the future. They can do it at any time if you owe them money, so it’s essential you make an effort to stick to the Ts and Cs. Missing a payment will only encourage them to throw the agreement out the window. To them, it’s more proof that you’re untrustworthy and have no desire to clear your balance. No matter how small the amount or how easy it is to catch up, you shouldn’t miss a payment deadline.
Have you dealt with creditors before? How did you strike a good deal?