Federal government statistics indicate that, in 2010 alone, delinquency rates on commercial and business loans jumped over 100%.  Business collectors are hurting, too.  Business debts assigned to them were significantly lower in 2011 than from the previous year.  Companies have literally been dropping like flies.

If you, like many other business owners are struggling with a tough debt situation, you or your staff will be faced with the unpleasant reality of having to deal with the consequences.  Constant calls will be interrupting your work day.  You will also be bombarded with dunning notices and threatening letters.  This can be intimidating and counter-productive, just at the time when you need to concentrate your efforts on bringing in new revenues.

You cannot affort to ignore a creditor.  The next step might be for a hungry collector to be assigned the account.  After that, it might very well be passed to a law firm, to file suit.

If you cannot make immediate restitution to the creditor, there are effective ways on how to address problem business debt.

Always remember that, whatever you do, treat all creditors and their agents with the utmost respect and courtesy.  You can only get back on track by communicating clearly and effectively with them. It’s common to hear others to speak of collectors as being, “liars, cheats and thieves.” This is an unfair characterization for most of the players.

Part of your approach has to let collectors know what your firm can and cannot do. Show a willingness, if asolutely necessary, to share basic financial information with them. Give them a good reputation to live up to and they will likely treat you with the same level of respect and understanding.

Virtually everything is negotiable.  If your company is owed money from another, you would not want to lose the total balance because your customer went out of business.  Most of us would consider taking less – and sometimes much less – if it could be shown that our customer was likely to disappear.  A lot of other factors come into play, such as:

• Are the debtor firm’s assets all “tied up”?
• Do you want their business in future, if they can survive?
• Is the cost and effort involved in filing a suit going to be worth it?
• Is the debt personally guaranteed?

Collectors generally know how to negotiate.  They will not necessarily make this clear at the outset, because they want to receive full and immediate payment for their efforts.  Put your proposal in writing and fax or email it to them.  The collector will forward it to their client – your creditor.  It will be much more effective than a verbal proposal.  After all, if nothing is in writing, what does the collector have to give to the creditor to support your case?

You will typically propose either a “drop-dead” cents-on-the-dollar settlement, or a payment plan.  If your cash flow projections look too grim, it is unlikely that a creditor will be interested in a long-term stream of settlement payments  But, if properly structured, your proposal has a much better chance of being accepted.

Your creditors will understand the worst case scenario.  Your business may file for bankruptcy or simply close its doors and disappear into the night. Clearly, they do not want to see this happen.  Your best option is likely to either negotiate and settle individual business debts, or do an across-the-board debt workout.  This satisfies creditor needs while giving you a shot at boosting revenues and building a stronger and more resilient business.  And what could be better than that?

If you need help to deal with business debt issues or a particularly troublesome business debt collector, give me a call at 888-701-7888 to discuss.

You can also request a copy of my FREE Report titled, “Discover How To Get Debt Relief For Your Cash Strapped Business.” This FREE Report is full of great tips and strategies for getting your business back in the black.

What exactly are your business debt collection rights? What can and cannot business debt collectors do?

If your business is coming under collection pressure, you have some legal protections from harrassment.  But business debt does not fall within the provisions of the Fair Debt Collection Practices Act.   This legislation protects consumers – not businesses – from being unduly hassled by debt collectors.

You have the right to ask the collector to provide you with documented proof of the debt being assigned to the collector by your creditor and also particulars of the actual demand that’s being made.

Once you have received this, you can start communicating with the collector.

A mistake made by many business people is in believing that a collector has absolute power over them and that they can immediately freeze their bank account or sent in the sheriff to remove their assets.  Nothing could be further from the truth.  A collector has no ability to do anything other than attempt to persuade you to pay them.

Collectors are motivated to get paid because they receive a percentage of the money you give them.  And this can be up to 50% for debts that are six-months over-due.  No wonder why some of them are so aggressive.  They have quotas and car payments to make.  They might threaten and cajole about sending the account to an attorney.  But they lose out, big time, if they do this.  The big money is made in collecting directly from your business.

If you don’t pay the collector, the creditor may assign the account to an attorney, who can eventually file suit.  After a suit has been filed, you still have legal rights to delay the case.  Depending on the size of the debt and whether or not you feel that the creditor was unjustified in all or part of its demand, you can file an Answer.  In some juristictions you can effectively delay eventual resolution for a year or more.

At any point along the way, whether with the creditor, collector or attorney, you have the ability to submit a settlement proposal and get successful resolution to meet your needs.  It’s usually best to do this before the matter gets to court.  But debt disputes can be settled at any stage, including after  judgment has been awarded to the plaintiff/creditor.

While the collection industry has to reign in the excesses of rogue business debt collectors, the better ones are actually persuasive and mild in their approach.  They realize that they have to understand the true situation faced by the business.  And that it can be counter-productive to practice harrassment and abuse.

It helps greatly to have a buffer between collectors and attorneys when you are doing everything in your power to stay focused in order to generate revenues and stay in business.  You also need to be able to cut business debt settlement deals that will help your company to survive - not speed its demise.  Of course we can handle this entire process for you here at Biz911.com

We have satisfied hundreds of clients since 1995, helping them to resolve their business debt and revenue problems and getting them back in the black.

If you haven’t already done so be sure to request a copy of our FREE Report called, “How To Get Relief For Your Cash Strapped Business!”

To get a copy of your FREE Business Debt Report, simply enter your name and email in the form to the right of this post.

Or, if you want to speak to someone immediately, please call us at 888-701-7888.

I recently heard someone say, “There are no business failures – only people failures”. That judgment sounds harsh. Often true perhaps, but not always. For Fred, the garden supply firm owner, he has not made the changes needed to posper. Last year was certainly a challenge for independent operators. Spring was so hot that supplies went unsold. Sales were way below average. People stayed away, rather than melt in his uncovered sales space. Or they bought their supplies at lower cost within the relative comfort of the big box store’s covered space. Fred’s fixed costs stayed the same, while sales dwindled and unsold perishables spoiled.

Fred had so much personality and knowledge. He never capitalized on this with an effective web or social media presence. He made no attempt to build an on-line base of interested gardener customers and provide continuing value. As a loyal customer, I never knew what specials he was running. I’m forever missing ideal planting dates for the various types of flowers and vegetables that we grow. Constant contact and information from Fred would have been welcome. And I, for one, would have spent a lot more money at his business had he made the effort to keep in touch.

Customer service declined in the last few years, simply by the way in which the hired assistants dealt with potential buyers. Ironically, the folks at the local big box stores tend to be friendlier and more helpful than the staffers that Fred brought in for the season. This, again, took a toll on sales.

Was Fred’s business demise a personal failure? It may seem so, but I really don’t know, because I have not spoken with him and don’t have the facts at my disposal.  Maybe he had health problems that crimped his ability to function.  No failure there.  Perhaps he made heroic attempts to soldier on.

I do know, with some certainty, that Fred’s company’s net revenues in the past few years would have increased had he taken these simple, cost-free measures to promote and maintain his company. That’s sad for him, because he would have been better for it today. And sad for so many of his customers, who have lost a favourite and convenient place to buy their gardening supplies.

The answer is clear, when you work with troubled companies.  Of course, some make it and others don’t.  The chances for success are pretty slim.  Ninty-five percent don’t make it past five years and, five years on, the same percentage applies.  And my main observation is that the survivors are owned and managed by resilient, resourceful people.  Simply put, they have a positive business mindset.  If it’s not there, there’s not much hope.

Absolutely no other factor is as important as this mental drive and toughness.  Without it, people lose heart and fail to do what it takes to ensure that their financially challenged businesses endure.  This resilience is the factor common to all successful business people.

The right mindset will equip the owner to seek solutions to set the business up properly at the outset.  Or at least, will make the necessary adjustments as he or she becomes established.  And if trouble hits, as it almost always does, to make smart decisions as to how to get back on track.  Lesser people throw in the towel too quickly, after times get tough and creditors get nasty.

“But how can a business owner change their mindset for the better?”, the author asked.  I’m no psychologist, but I do observe people closely.  And here are the positive steps that I recommend, having seen people take them to fundamentally improve their ability to work through very tough business problems:

• Surround yourself with positive and intelligent business people.  Stay away from negative influences.  There’s a “conspiracy of the unmotivated”, as Dan Kennedy would say, that can drag you down.  Heed the advice of the great Jim Rohn, who claimed that you become the average of the five people with whom you associate the most.
• Read and absorb as much good marketing and business development information as possible.
• Join a mastermind group, or start one of your own.
• Seek ongoing assistance from a paid-by-results business development specialist, who sees your business from a different perspective than yourself.

I’ve seen dejected, beaten business people turn themselves around, before taking the first steps to save their companies.  It often starts with the realization that they are not alone and that untold thousands of other businesses face similar challenges.  The biggest obstacle to recovery is not declining cash flow, or creditors calling, or the banker’s request for a meeting.  It’s a defeatist mentality and outlook.

A business debt workout and turnaround is not always easy to get through, for any business owner.  But there’s an end to it.  And it is a much easier process for specialists like me to implement and execute if the business owner has the right, positive mindset.

Balance sheet ratios and cash flow projections?  Important, of course.  But in my experience with challenged businesses, the owner’s mindset is the best predictor of success or failure.

The frustration for us and others in our business turnaround specialty is that this leads to pessimism and a resistance to change.  The net result is that we are often called in very late, after more damage than necessary has been done to a client’s business.

As with your own health, if you wait too long before going for a checkup, it might be too late to save yourself from real damage.  I’ve been thinking about this a lot lately, since learning that a highly-respected mentor is struggling with late-stage bowel cancer.  His specialty is business development.

He has long taught business owners and consultants to find effective ways to ramp up revenues and bottom-line profits.  His cancer was discovered at a late stage.  My concern is that this beloved guy’s illness could have been resolved at an earlier, more treatable stage.  I don’t want to ask, but did he not have an annual check-up, which should have exposed the problem when it was more easily treatable?

This brings me to think about our businesses in general, which have many similarities to our living, breathing bodies.  We need to keep an eye on progress by checking vital signs.  If not, we can end up in intensive care.  Far better to live and operate under a healthy diet and exercise regimen and to take steps early enough to be able to make timely changes.

This is one of the fundamental issues we face when confronting client concerns.  All too often the business patient is dying in front of our eyes.  It cannot keep current with creditor needs.  Revenues are down, so cash flow is inadequate.  The late-stage prescription is generally to communicate effectively with creditors and their agents, to work out a sixty-day payment hiatus.  This provides time to recoup, adjust and take steps to ramp up revenues.

It is far better to recognize the problem at an earlier stage, sometimes defined as mid-decline.  At that point the company still has some maneuverability.  Management is not yet preoccupied with creditor calls and lawsuits and the need for business debt relief.  It still has time and resources to do what it takes to recover.  It can likely pay its creditors in full, albeit on revised payment terms.

As with our personal health, it can take real courage to ask for a business analysis and prescription for the right medicine.  But unless we do so, before the business starts to keel over, it can be much harder to keep it afloat.

I’m rooting for my friend and mentor.  He has the positive outlook and the best professional help to beat this.  And as with the owners and managers of troubled companies who are trying to plot the right course, mindset trumps everything else.

At the same time, I’m looking forward to working with more business owners in the New Year who look for business turnaround help when they still have lots of options.  It is highly satisfying to bring a business back from near death.  But it makes far better sense for the owner to ask us for help before they have to call the ambulance.

This particular show featured a small group of crafts people from Britain.  These folks had all been specifically invited.  They had crossed the ocean with their creative output.  Surely the intent was to burnish their reputations and to sell as much as possible, at the show and to buyers here in the future.

We happily bought several items from various vendors, mainly for holiday gifts.  But the experience, in each case, was troubling.  At the point of sale, we were never asked for contact details.  In other words, these people were content to make each sale without attempting to forge a continuing relationship with their customers.

As it turned out, we wanted to keep in touch with each of them.  We want to know what else they will produce, even though they will not necessarily be back in the US.  So what do you do?  You twist their arms.  You give them your business card, while you wonder if it is to be lost or discarded when the booth gets pulled down.

I have to say that each crafts person seemed to appreciate unsolicited feedback on the need to build a growing customer list.  A community is a better word for it.  The immortal Dan Kennedy calls it a ”herd.”  In other words, a group of people who are likely willing to buy more of your output and to tell their friends and relatives.

My comments were based on an attempt to help the individuals concerned.  After all, I had purchased something of beauty and value from each of them.  That first sale was so much more difficult and costly for them than any subsequent transaction.  But that likelihood of future business is bleak indeed, unless they take steps to stay in touch with me.

I wonder why this comes as a surprise to these interesting and intelligent folk.  Their lives depend on satisfying as many customers as possible at the greatest possible margin.  In that respect, they’re like all other business people.  So why didn’t the individuals I dealt with yesterday take simple positive steps to build a customer list?  Is it because arts and crafts people think differently than the rest of us?  Is marketing a dirty word to them?

It’s an established fact that the longer a company has to wait for a B-to-B receivable, the more likely it is to go unpaid.  This applies in general, but in this economy, formerly strong customer firms are dropping like flies.

Smart owners and controllers understand this risk, when looking at delinquent B-to-B receivables.  They recognize the differences in the situations faced by debtor customers.  If your firm is genuinely in need of business debt relief, a clear and concise business debt settlement proposal can go far to bring about a solution to help both sides.

Companies that attempt to collect every dime owed from every business customer can end up with a lot less than expected. It pays for them to be flexible and to heed what’s happening to them.  You likely have the same situation with receivables of your own.  You understand that creditors need further information before coming to any decision on how to proceed.

A proverbial bird in the hand is worth two in the bush.  A creditor firm will have to wait for months, after retaining an
attorney to file suit, to find out if a lawsuit is productive.  In other words, to actually be awarded a judgment.  And then, for management to hope and pray that full restitution will be transferred from the debtor’s bank account to theirs.

It often ends up as a piece of paper to stash in the “uncollected judgment” file.  It’s far better, in many cases, for a
creditor to carefully consider a negotiated debt settlement.  The outcome can be more positive and less
stressful to each party.

This is the time of year for you to consider making business debt settlement offers to your creditors, if you need these to survive.  A complete debt management workout may be called for, as a better option to Chapter 11 bankruptcy.  Deals can be as varied as circumstances warrant, be they drop-dead cash settlements or long-term payment plans, or a combination of both.

In following through with your plan, your creditors will minimize their immediate losses.  You will figuratively shake hands after deals that meet each party’s needs.  You get the opportunity to manage a strong business turnaround, while giving your creditors your future customer value.  And what could be better than that?

If he holds this course, without being able to immediately boost his declining top line, he’s likely to go down like the Titanic.  And that’s bad news for unsecured creditors, his employees and his family, who would all lose out, big time.

Most business owners are honest and ethical.  If they run into serious cash flow issues, they naturally still want to pay everyone everything owed.  We all expect to get paid, as well as to honor our commitments to others.  But our clients and customers don’t help us by closing their doors without notice, before we know they’re in trouble.

Companies that extend business credit see both sides of this picture.  If a debtor firm disappears without a trace, it can cause real grief and anger, depending on the size of the account and the lost future business.  But there’s the remorseful feeling that they could have been helped, had they been open about their situation and discussed a potential solution at an appropriate time, earlier on.

If your receivable is late it makes sense, particularly in this economic environment, to keep close to your customer, especially if the sum is significant.  By the same token, if your payables have unexpectedly outstripped your ability to service debt with available revenues, you are duty bound to communicate this fact to creditors.  Not only that, you need to try to reconcile their needs with your firm’s abilities.

In the final analysis, our best interests are served by looking after our own welfare, and that of our families and employees.  Management of large companies in trouble know that, which is why they are so ready to file for Chapter 11 bankruptcy protection, to try to restructure and save themselves, irrespective of the impact on creditors.

The best outcome for financially troubled small to medium-sized businesses can be to engage a paid-by-results business debt workout and turnaround specialist.  If your firm is in real trouble, divest yourself of the notion that you have to pay all your creditors one hundred percent of that owed.  They are likely to settle for much less if a professional presents them, or their agents, with a true and forthright written account of your company’s situation and what is likely to happen if you can not gain concessions from your creditors in general.

The bankruptcy courts are full of cases where business people wanted to pay everyone in full.  It makes sense to recognize, early enough to make a difference, that you have to communicate clearly and effectively with creditors and to do deals based on reality.  We do this for clients on a regular basis.  It’s called a “debt workout.”  There’s no shame to it.  You’ll likely be thanked for your honesty.  You’ll save everyone a great deal of grief, given the alternatives, while providing suppliers with your future customer value.  Your business will be given a second chance to survive and ramp up revenues.  And what could be better than that?

This came home when a client was trying to sell his business.  John was an artistic and savvy producer of niche business software.  He had brought his small company back from the brink of disaster to a highly functioning and profitable enterprise.

We were sitting in a business broker’s office.  Several buyers were interested in the products, potential and financials, but it became clear that John could not show how the company would thrive without him.  There were no systems in place to potentially replicate his success.  He wanted to move on to other endeavors and was unwilling to stay with the new firm, under different management.  Essentially, his company was him.  He had nothing to sell, except himself.  In the end, he kept his business.

Most of us realize that you cannot run a company in the absence of effective processes.  A systematic approach to marketing, financial controls and every other aspect of management is crucial.  But how do you produce innovation and creativity on demand?

That’s the dilemma recognized by potential buyers, when turning down the opportunity to buy John’s firm, if in fact he couldn’t come with the package.  And it’s the question many of us pose about Steve Jobs and Apple.

I still mourn the loss of John Lennon, cut down in his prime, for the music that he would have produced had he lived.  In the same way, after Steve Jobs’ untimely death, we will forever ask ourselves what unforseen value we have lost.  No business process can give us new Lennon songs.  By the same token, how can anything be expected to reproduce Jobs’ genius?

In my line of work, I do everything in my power to reduce business debt and increase revenues.  But sometimes – not too often in my experience - the owner just has to let go and file for a business divorce.  I was thinking about this the other day after hearing from an old client.

I’ll call him Mark.  His original clothing manufacturing business just hadn’t made it.  He had been at a significant competitive disadvantage with Asian manufacturers.  He then focused on garment design for the childrens’ market in the 1990′s.  When I got to know him, that wasn’t working, either.

Truth be told, Mark was a poor marketer and sales person.  He liked clothes design, but just didn’t like dealing with people.  And that was a huge problem.

Mark’s company’s growing debt load was way too high for its revenues to handle.  Even if deeply discount payment plan settlements could have been worked out, it wouldn’t have helped.  The writing had been on the wall for years.  But he had to be told by an imparitial, friendly source that he had to get out.  He needed to divorce this turkey in a way in which he wouldn’t lose his shirt.

In his case, he was able to get out with his equity intact.  He had gotten good legal advice at the outset and had a pre-nuptual agreement with the business.  There were no liabilities in Mark’s name.  If the business had to go, it was asset-poor and wouldn’t take his stuff with it.  And this meant that hostile creditors would not be able to claim monthly alimony payments.

I had suggested to Mark that he get a job for the time being, until he found another entrepreneurial niche.  He promptly found a high paying marketing position, in a rapidly growing, publicly traded Internet startup.  This was before the dot-com bubble burst in March, 2000, when just about any new web-based venture could find enthusiastic investors.

Mark was unlucky in one sense, but lucky in another.   He was as hapless at his job as he had been in his business, perhaps predictably so.  And he was fired after several years.

But luck was on his side.  He had gotten large sums of company stock, partially in lieu of pay.  This had rocketed in value from day one.  But he cashed in his shares, determined to completely sever his association from the firm and to invest his funds elsewhere.  Happily so, because the following month the company stock tanked.  Fortunately for him, his equity was protected and not immediately reinvested in another dot-com.

Mark bought a mansion on a large piece of land outside of Philadelphia.  He tells me that he never needs to work another day of his life.  And it’s all because he decided to file for that business divorce, after protecting his personal assets.  He landed on a feather bed, rather than with a thud on the sidewalk.

This was an arrangement that worked out beautifully, if in an unusual way.  Lady Luck was very much involved.  But the moral is to protect your personal assets from the outset and, if things look truly bleak, get out when the going’s good.

You are not your company.  It is a separate entity, but even so, you are not necessarily married to it for ever.  If  real game-over trouble hits the business, it’s not the end for you.  Other opportunities lie around the corner.

If you wait too long, after you have exhausted all reasonable alternatives, that beloved business might just rise up and smack you, then run off with every penny you’ve got.  And what could be worse that that?