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Critical Care for Companies® Turnaround Step 11: Dealing with Creditors Advice from Arnold S. Goldstein, Ph.D. and author of The Business Doctor Put on a bullet-proof vest!
Do not let creditor
pressures get the best of you, so you can focus on the main objectives
of the turnaround. You can't think positively or work creatively when preoccupied with protecting yourself from the searing heat of creditors. But a thick skinned employee or consultant whose life savings are not wrapped up in the business, can leave behind emotion. Find someone with the stomach and the cunning to play the game. The title of controller or vice president/accounts payable allows your employee to interface authoritatively with creditors. Find some one who can warn you about particularly onerous threats but can pacify creditors so they won't harass you. 7 Rules to tame creditors 1. Forget phony excuses To defuse creditor pressure, the Business Doctor routinely asks creditors for a 60 day collection moratorium while he analyzes the client's situation and formulate a workout plan. Most creditors agree because the request is reasonable. When 60 days pass, he informs them that a plan is nearly completed and will be on their desk within 30 days. This wins a 90 day hassle-free window. If they reject the plan, he asks for 60 more days to modify the plan. 2. Don't let creditors intimidate you They may threaten to push you into bankruptcy (they almost never do). They may threaten lawsuits (you can tie them up in courts for years). They may threaten to report you to the credit bureau (haven't you lost your credit already?) Ignore creditor threats. Let push creditors know they will be paid after more patient creditors are paid. This counter-threat works! No matter who chases you for money, fight back and refuse payment. You need to protect yourself and your more cooperative and patient creditors who are waiting in line for their fair due. 3. Refuse override payments 4. Don't give your creditors security 5. Ignore business termination threats 6. Listen. Don't talk Watch what you tell your creditors. You may unwittingly say things that will later hurt you. For instance, admit that your are insolvent and your creditors can throw you into bankruptcy. Nor would you reveal who your other creditors or suppliers are to a disgruntled creditor, who may solicit their aid to throw you into bankruptcy. Tell your creditors only 4 points: 1. you are now experiencing problems and cannot presently pay 2. you will pay C.O.D. on future orders
3. No unsecured
creditor will receive preferential payments; all general creditors will
be treated equally
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