How to Negotiate with Your Creditors
Are your creditors bringing you down? Heather Stone, owner of You’ve Been Promoted says, “My number one tip is to never look at your cash flow position as bad. Instead, view it as a great position to be in for a growing business – it allows us to deal with it better!”
Creditors exist simply to collect the money that is owed within the boundaries of the law so essentially, all they really want to do is collect the debt on time with minimal fuss. There are plenty of options when it comes to extending your favour with creditors, such as lowering monthly payment amounts, deferring a payment or two, waiving late fees and penalties, lowering the interest rate or restructuring the loan to simply make it more attainable.
Creditors and Your Money
The rule of thumb is to never agree more than you can afford to pay when negotiating – else you may find yourself in a similar situation with the same creditor a month from now! The first thing you need to do is work out your actual financial situation (hint: plan your budget – see Day 5 of the #cashflow challenge) and be as honest as you can with your creditors. The last thing you want to do is negotiate a settlement or payment plan that you can’t adhere to.
Next, you need to help your creditors understand your current financial situation and not rush the process. Most negotiations can take several rounds and may stretch up to even weeks, but it would be worth it in the end. Another great bargaining tool would be to offer to pay the entire amount in one lump sum after a fixed amount of days.
Once you’ve finally gotten yourself out of trouble with your creditors, it’s finally time to take a good long hard look at your cash flow health and avoid making the same error again. You can then save the time spent negotiating with your creditor on other meaningful tasks instead, such as ensuring the success of your business.