Skillful Negotiation Of Commercial Debt

Some negotiation of commercial debt succeeds and some fails. The key to real savings in restructuring debt is understanding how to best position your company to achieve a fair-minded settlement with your creditors. At Debt Management Associates, we have developed a Financial Recovery Process that takes into account all aspects of your business, so that negotiations between you and your creditors are meaningful and complete.

Successful business debt restructuring addresses the effective negotiation of commercial debt by purposeful management of a wide range of variables. If those variables are managed correctly there is a tremendous opportunity to not only overcome your business debt problems but to end up with a thriving, profitable business.

In the Financial Recovery Process, the primary types of variables that need to be managed are economic, credibility, legal, and collection history.

Economic Variables. Economic variables that need management consist of effective communication and documentation with your creditors regarding your current cash flow, future earnings potential, assets, guarantees, outstanding business debt loans, security on any debts, etc. The financial position of the creditor needs to be considered as some creditors are in deep need of the money, while others have deeper financial reserves. Proper use of these economic variables result in an informed and interested creditor who is most receptive to our communications and offers, resulting in efficient negotiation of commercial debt.

Credibility Variables. As we have discussed on this site, having clear goals and adequate resources to achieve business debt elimination are instrumental in restructuring corporate debt. But the best laid plan will be useless without your creditors' cooperation in allowing you to implement your plan. This takes credibility. Open communication with your creditors has to be correctly managed. High quality information and frequent communications need to be exchanged and maintained in order to reach equitable settlements on your debts. Broken promises in the past, lack of clear goals or a clear reorganization plan, unanswered inquiries, etc. damage credibility and slow the process.

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 judgement and seizing assets. They will be influenced by their current position in the collection process. They will also 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. The added expense of the legal process is always a factor in negotiation of commercial debt.

Collection History Variables. The history of your debt account with a creditor is important to the creditor's collection stance with you. 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. At Debt Management Associates, we have considerable knowledge of collector rules and patterns, and this knowledge helps us work fairly with creditors in negotiation of commercial debt.

The above list of variables is not meant to be complete, and there are secondary variables that can come into play during negotiation of commercial debt. As a commercial debt management company, we understand well the existence of all of these industry variables, and our Financial Recovery Process was developed by us to most effectively utilize them for your benefit.

As we have discussed on this site, having clear goals and adequate resources to achieve business debt elimination are instrumental in restructuring corporate debt. But there is more to it than just that--creditors have to be included in the process. This is where our years of expertise are invaluable to you in the negotiation of commercial debt.

We bring our expertise to the table in facilitating arms-length negotiations with your creditors in restructuring your corporate debt with them. As a result, we typically see two outcomes for our client's debts. Creditors either agree to settle our client's debt for less than is owed or they agree to extend the time in which they are paid. Either way, the business debt restructuring process allows you to allocate more of your resources towards increasing your revenue.

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 judgements 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. Negotiation of commercial debt begins with understanding the "ins and outs" of these factors.

What we do for you is to effectively communicate your current situation and your future plans with your creditors in an effort to help facilitate their decision-making process. We help them to make the best decision they can based on their company's needs, which are in line with your financial recovery plan. As a result, we have settled debts in every stage of collection--from recently delinquent debts, to debts with judgements where the courts are requiring disclosure of assets for seizure.

Negotiation of commercial debt is a skill. We don't lie to creditors. We don't misrepresent your situation. We don't make false promises to them. What we do instead is give them the big picture. We show them you are taking the "High Road" with them. We tell them what you are doing to get them paid and ask for their help in letting you get there. As a commercial debt reduction company, we have found that the guiding principals of respect and honesty lead to reasonable compromises between all.

Here is a discussion on how negotiation of commercial debt is a real opportunity for you to save a significant amount of money.

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