Company Debt - Four Tips for Restructuring it

In any economic environment, it is not unusual for a business to have difficulty paying its suppliers, and that is certainly true in periods of sluggish activity such as we are experiencing today. If your business finds itself behind on your account payables, rather than hide your head in the sand, follow the tips in this article and you may be able to get yourself in a much better position.

1. Come up with a plan. Easier said than done, perhaps, but just making the effort will stimulate ideas, give you direction, and show your suppliers that you are serious about getting caught up. Take the time to type your plan out in a nicely formatted document. Include historical financial information and projections. The more effort you put into your plan, the better.

2. When presenting a repayment plan, find a way to make a healthy cash payment upfront. A supplier will be much more likely to agree to some kind of reasonable payment schedule if you are able to make a payment upfront that shows you are serious. It will make a dent in what you owe and increase the odds that your plan will be accepted.

3. Have a conversation with your suppliers (or whoever you owe money to) about your expected future purchases. If you have been doing business with the supplier for a long time, then you have more leverage. A track record of making purchases and paying on-time will give the supplier more faith that you will be able to clean up the problem and making more purchases in the future. If you don't have a long track record, bring some information or statistics to support your belief that you will be able to get back on track.

4. If a vendor won't work with you on terms, offer to convert the debt to a note. This will put the vendor in front of others to whom you owe debt. Sometimes an unsecured business note is not enough - you may to have back the note personally or secure the note with assets. This is not a step that should be taken lightly, but it is one tool you can use to come to some kind of arrangement with your suppliers.

Restructuring debt is a complex subject, and one that you should discuss with a qualified accountant.