How to: Negotiate with creditors and trade partners

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How to get debt relief for your small business: negotiate with creditors and trade partners


In the third article of our series on getting debt relief for your small business, we’ll talk about one topic that might make any business owner nervous. But before that, make sure to check out the previous articles of the series: we’ve talked about applying for a small business administration loan or an alternate terms loan, both of which could help you keep your business afloat, as well as about improving your business’ cash flow. Both of these steps may help you in the next avenue of getting debt relief for your small business: negotiating with creditors and trade partners.


When to negotiate with creditors and trade partners

The most important thing you can do for your own business’ wellbeing and your credibility, is to stay in front of the situation. The best time to approach creditors and trade partners is before you default on your loans.


Despite any uneasiness you might have in approaching your creditors, the truth of the matter is they are willing to negotiate with you if you approach them in a timely manner. And approaching them before you’re in the red also adds to your trustworthiness. Now let's see what points you can discuss with your creditors.


Change payment due dates

When you have a large amount of debt payment to make at the same time every month, that adds strain to your business's cash flow. Simply adjusting your payment due dates may ease the burdens of your debt payments.

It’s also worth keeping in mind that your creditors and trade partners have more to win if your business stays afloat and avoids a default. If changing the payment date alleviates debt issues you might be having, they’d be willing to agree to it, especially when the alternative may be defaulting on the debt.


Increase the repayment terms

The amount you have to pay each month for a loan is directly tied with how much time you have to repay said loan. That’s why when you extend the repayment terms, you can lower your monthly payment amount. If your creditor or trade partner is willing to accept a longer repayment term, you may ease your debt issues.


But it’s also worth keeping in mind the long term costs of extending your repayment terms. That’s because you may end up paying interest for the loan for a longer period of time.


Ask for more favorable terms from trade partners

As a small business, it’s a matter of fact that you rely on other trade partners, as they do on you, to keep the businesses running on all sides. That’s why it’s worth asking for more accommodating payment terms from your business partners. They may offer you up to 90 days, especially if you have a history of paying on time. Nevertheless, keep in mind that extending terms may accrue additional charges.


Your business credit score may also help you get more favorable terms from your trade partners - which is another reason to start negotiating with creditors and trade partners before things get too rough for your business.


Last, but not least: negotiate with your landlord

While it’s hard to imagine a small business without any kind of space to operate in, it’s rare that business owners remember to look for support from their landlords. Especially if you have a friendly relationship with them, you may be able to negotiate lower payments or defer them for a couple of months. After all, landlords would rather keep their current tenants than go through the hassle of looking for new ones. More so, if they’re involved in the local community and aware of current economic issues.


When your business is looking for debt relief solutions, negotiating with your creditors and trade partners is only one of the avenues which you can take to ease your cash flow problems. And when it’s applied with cutting down your expenses and optimizing your budget, it helps you build a better case for you and your creditors and trade partners to work together.


If you’re looking to consolidate your debt or restructure your loans, get help from a business debt expert like Creditors Relief. We’re willing to advise you with your debt relief options and our review process is free. Sign up here.


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