consolidate commercial debt.
Payable Restructuring.
The larger the better.
While you're here, this is a brief intro and if you like to discuss your situation, we'd love to hear from you.
Vendors want to be paid something rather than nothing.
We develop a cash flow plan to determine exactly what your company's cash position is on a weekly basis.
Vendors will wait to get more rather than short circuit relations to get nothing
Once we know what's needed, we develop a vendor moratorium - a plan you approve to present to your vendors.
How we can help you -- We are cost affordable and cost effective. We keep borrowers out of bankruptcy. We give third-party creditability to your company's AR & AP departments. All our efforts are hands on. We can turn around your company's cash flow problems.
Believable Plan - Sales have slowed, collections are even slower - but the vendor want their dough on the terms supplied. What's a good guy to do? Well it's straight forward - you have to take the overhang of old payables and make a plan t pay them off. While sales diminshed you used the slowed collections to pay losses, expenses you didn't cut on the way to the new sales level.
Any plan has to be breakeven cash, or positive cash flow.
Look, the business can't go forever on losses. Losses end up to be negative cash and that's why you're in the dog house. You've been taking slowed collections and paying operating expenses rather than cost of sales - vendor payments. So the plan has to cut expense so that collections can pay current vendor purchases and still leave enough money to pay current expenses. This is numero uno - must be done and if not - no one will accept your plan.
The plan relies on keeping sales at an achievable level.
If sales were soaring you wouldn't be restructuring your payables. They're not - and in this economic climate - they're not going to soar for quite some time. So get real and make a forecast on the real revenues you're going to produce. No pie in the sky - get it right and the vendors will support you. Get it wrong and it will be obvious ASAP - and you're screwed.
Once you sold it - plan on the NEW collection timeframes you're really experiencing.
You're not the only one who's paying slow and getting paid slow. Everyone is being paid slow. It's unavoidable in a recession. So assuming you can project the sales numbers right - you have to factor in the slowed collections you and everyone else on the planet are experiencing.
Get the Plan Right - We've averaged over a 95% success rate in negotiating a reduction and settlement of client debt. You can expect a total cost of 60-65 cents on the dollar of the assigned delinquent debt. This average total cost includes the reduced amount to the creditor and our fees. Because our settlement fees are based on a percent of the savings to YOU we have an incentive to achieve the greatest reduction possible. We're in total alignment with your goals. Nice.
Historical Value - How long have you been a customer of the vendor your about to negotiate with? How big are you within the neighborhood, the city, the region, state, or even nationally? The bigger you are, the longer you've been doing business together with the vendor, then the better the deal you're going to be able to cut. If you just started last year and you don't buy a lot - they're going to shove you to the back of the line. But if the cards line up nicely for you you're right up front.
Size counts.
If you're big - no matter what - it matters. But remember there's a fine line between being big enough to NOT want to do more with you and big enough to NEED to do more business with you. One shade either way and you're in clover or you're screwed. The balance is critical.
Time counts.
Vendors care about whom they're helping. Long term customers that have been faithful and dedicated and have historically been paying their bills get a lot of consideration from vendors for payment support and relief. Inversely those that are brand new customers get little empathy and little support as well. The key here is to make the right pitch - if you've got years of good will - use it - heavily. If you have very little good will, pitch the future don't pitch the relationship - since there's not much there to pitch.
Future Value - Future value to the vendor goes some way in getting relief and support from vendors. But, the vendor has to believe in your future, it can't be just you promoting and singing praises of that great year you had together 5 years from now. So if you know they want you long term - leverage the hell out of it. But if you know they really don't see you're future expansion and increased future value to them - make sure you lay out why you'll be valuable and why their support now will pay them back later. And vendors aren't looking for a new religion so converting them from firmly held beliefs only diminishes your chances of support and relief. Knowing that up front improves your chances.
Clout - All in all your value to the vendor is one of the primary considerations related to their support and payable restructuring. Value comes in numerous flavors and blends. However every vendor will highly consider your longevity and your size as two of their top 3 or 5 considerations for payable restructuring. Some of the other considerations include competitive posture, perhaps you're the guy winning the university business in a major metro - they want that market - there's leverage for you! Expertise - perhaps you're the market leader in your area(s) known for expertise and high quality clients. That's leverage too.
What it comes down to is clout. You know how to evaluate your clout. You'll probably over estimate it by 20% and you'll probably push it too hard by 20% - so back off 1/3 and you've got it just right - that's your clout! Be way under or over and you've screwed up - big time. So get it reasonably right and drive a viable, fair, tough deal that puts some of the burden on them - for both the time to pay and the reduced amount to pay.
Measure your position accurately - understanding the native willingness of the vendor to support the time and amount to be paid is the most valuable contribution we can make quickly. There are not 400 stories about how this works, there's 7 or 8 maybe 9 versions of this - and the first 2 versions make up 75% of the deals. So understanding how to quantify - how to get what is essentially in some form available to you - is the sweet spot. That's what we deliver - the sweet spot. We're calm and energy combined, with no loss of control for you.
put the amount you're willing to risk on the line - CHOOSE to be passive OR make it work for you
Willingness to convert what could be unsecured vendor debt competing for little value with other unsecureds in a bankruptcy could be high amongst vendors. If the company provides a note (a bank debt like document soon a sample will be posted here) - in many cases that improves the quality of the indebtedness of the vendor - he/she is still unsecured but the nature of the note puts him/her ahead of vendor payables. That's quite desirable. Now if the company has something tangible they can secure some or all of the note with - perhaps or perhaps not - that asset backing. Also in some cases the use of a personal signature to back some or all of the note should be considered. If you know the other side is there this may be a strong weapon. If you think the end is in sight it may be a pretty poor decision. But at the end of the day - you have to make some numbers about what you're willing to do and then actively engage that leverage. If it's zero you've got about that much leverage.
the more cash you pay the sooner, the more you can ask for
Your ability to organize a plan, get agreement and then make an initial payment on the plan is highly stimulated by the amount and speed you will pay at the point of agreement. Vendors want you to put your money where your mouth is. By saying I will do this, and I expect that, and then committing hard cash immediately behind it - that says a lot to the vendor. Plus of course they must make a balancing decision between getting the proposed cash amount right away along with the terms proposed or stay in the position they are now - stuck and chasing.
We can help you decide what to do. What we can do is provide you metrics to quantify your risks. Additionally we can quantify - qualitative risks together with you. On the one hand this engineered view is highly analytical and useful, but in the end it's 49% of the decision making unless the analysis supports your intellect and instinct. But if it correlates together with your intellect and instinct and helps guide it, and informs it - well - then hell it's really valuable. If you're insistent upon ignoring it - well it's still valuable.
Provide Historical and Projected Summarized Financial Statements
Vendors need a simple view of what's been going on and what you expect to go on. You can put this all on one page. Show 2-3 years prior and 2-3 years future. Here is a link here to see a summary and detail 12 month cash flow , and there is a template to there to download it. Make it simple maybe 5-10 rows - follow the summary cash flow - here. Throw in another sheet of cash in, cash out, and net cash. And finally a mini-balance sheet that says current assets, other assets, liabilities, long-term liabilities, and stockholder equity. That's it. Oh - make it quarterly only. Have the detail ready just in case.
Have A Simple Formal Note for the Payment Plan
You want to be able to advocate and pout in place the terms of the deal you promoted. Also you want to avoid their legal team becoming involved. Soon there will be a link here to a sample note that you can modify and use. And remember we're not lawyers - but then again it's a letter - not a note and it works just fine.
Have a Standard Terms Sheet
Have your term sheet ready since providing the terms up front is the best approach. Write the terms out in numbered form and use full sentences that are simple but clear and not verbose. Be comprehensive, yet too many terms will kill a deal. And remember that leaving out specifics in certain ways can be as specific as identifying them. So balance what is documented and what isn't.
We'll create comfort for you and for the vendors. We know all the docs and we deliver them all the time. They're the best quality and presentation anywhere. They look good, they're complete, they're accurate, and they're easy to use. We'll unify everything and optimize your benefit while partnering with the vendor on your behalf.
What's the alternative?
Have you figured that out. Do you already know you can't pay everyone without support? If you have some finite points in your mind, than you really are at the leverage point. If the business is going to struggle even more with out support and be jeopardized then comparing a chapter 11 versus a workout really is the comparison. If you think credit is tight on the network news, try to get credit in a chapter 11 to finance the company. Forget it! So the alternative for the vendor is fighting amongst the unsecured for a piece of the pie. Not very attractive for them.
Nuclear Scenario
It's this nuclear scenario that is indeed the comparative and must be delicately balanced. If they really think you're going they may just do nothing. And if they don't see it at all they'll wring your neck for the dough!
Times are tough. You have more benefit then you think. That's really the issue here. You gotta drive a hard bargain - there's a perfect balance between their responsibility and yours. You have to shoulder some of the burden - but they do to. Portraying the delicate nature and your need for their participation in the solution - that's what we deliver. Results. We do this.
Pick A Point where your account doesn't worsen
The best way to bring negative attention is to owe you vendor more and more that's older and older. There's a natural progression of current, to 30, 60 and 90 days and over - but if it's continual collections will shut you off or increase the pressure, or both. However if you stop the decline - often through nothing other than personal attention and priority - you've made the first step to getting vendor cooperation.
pick an amount that partially, regularly pays some of the old
Even if it's a small per cent of the total - any progress demonstrates progress! And attitudinally - it's totally respectful and later excellent leverage for you. It gets the ball rolling and it's not impossible - hard - but not impossible.
DO the two items above - today
Do both of the above prescriptions by Thursday night. On Friday start a new program where you dig out of the hole and get the vendor to dig with you.
How we can help you. We are cost affordable and cost effective. We keep borrowers out of bankruptcy. We give third-party creditability to your company's AR & AP departments. All our efforts are hands on. We can turn around your company's cash flow problems.