Should You Negotiate with Creditors on Your Own?

Negotiating with a creditor is all but guaranteed to be a nerve-wracking experience. Even if you find yourself represented by a highly qualified and experienced professional team it’s natural to feel anxiety when the stakes are often as high as the future of your business. These anxieties will only multiply manifold if you decide you’re going to negotiate with your creditor on your own. In general negotiating with creditors on your own is a bad idea, but there is a crucial factor which can make the process worthwhile and successful- and it’s not what you think.

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The only time you should negotiate with your creditors on your own is if you are able to do so without emotion. Most people believe that a thorough understanding of all the legal and accounting ins & outs of their loan will be their best asset during negotiations, but all of that knowledge and know-how will do you know good if you can’t keep a cool head during the deal’s proceedings.

At the end of the day most people aren’t able to negotiate dispassionately with their creditors when the future of their company is at stake and should never try to tackle the process on their own. While the professional expertise, the convenience and the experience offered by a successful legal firm are all highly beneficial during a negotiation, it’s your professional representations emotional distance from your case which makes them such an essential hire.

The Amazing New Secret of Restructuring Business Debt

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You’d be hard pressed to find a business which didn’t take on significant debt to either form or to grow during a critical stage of its development. Many of those businesses will eventually find themselves unable to pay off these loans according to their original terms and find themselves needing to restructure their business debt in order to stay solvent and to produce a business plan which will allow for future profitability. While reducing your operating costs in order to lower overhead and generate extra cash to pay off your debts is a valid response to insolvency, there is a secret which allows you to restructure your business debt without freeing up or generating any extra income.

Many companies have been able to negotiate with their creditors to exchange a chunk of their business debt in exchange for equity in their company. Essentially a businesses’ creditors will “buy in” to the company which owes them money, purchasing a stake in their future through the alleviation of already extended credit.

If you are planning on restructuring your business debt through this method you MUST work with experienced and qualified professionals to make sure you don’t accidentally provide your creditors with a controlling share of the business in the process. If you and your professionals craft the proposal intelligently and carefully you will be able to trade debt for equity, restructuring your business debt without losing control over your company and without having to immediately generate addition cash.

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Accounts Receivable Factoring

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Many companies are choosing accounts receivable factoring as a way of restructuring their organizations, increasing cash flow and improving their financial statements. If you own a company, and feel a cash crunch, accounts receivable factoring might be right for you.

Accounts receivable accounts are debts that your customers owe and are often called receivables. Accounts receivable factoring works by selling your accounts receivable accounts and balances to a financial organization, or investor, who is willing to purchase them. When this occurs, you sell the balances at a discounted amount, and receive immediate cash for them. An investor is likely to use a certain percentage as a way of calculating what these debts are worth.

Investors choose to purchase these receivables, because of the future value they have. Organizations are often willing to sell these collectibles at a discount, by thinking of the fee as a cost of generating revenues and cash.

One primary purpose for using accounts receivable factoring is to improve your cash flow. Businesses with little or poor cash flow often suffer problems continuing their operations. By using accounts receivable factoring, you will improve your cash flow. You will not have to wait to collect these accounts, and you give the burden of collecting them to a third party.

A common alternative to accounts receivable factoring is taking out a loan. Many people are opposed to this, because with a loan, you will pay interest on the borrowed money; which can often amount to more than what a company will purchase the accounts for. In tough economic times, you might not even be able to obtain a loan, and if you do, the loan rate might be extremely high. Another reason why you should choose factoring over a loan is the effects on your company’s financial statements. A loan increases your liabilities on your company’s balance sheet, while factoring swaps one asset for another. So before your company experiences cash flow problems, consider accounts receivable factoring.

Corporate Tax Help

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 All businesses have one common concern, their corporate tax code. Before 1908, no American businesses were taxed at the federal level. Now, they’re hit with a rate of over 39 percent, as the United States corporate tax rate is the highest behind Japan. Government leaders want to simplify and eliminate the tax loopholes, so they can treat each corporation fairly.

Here are some tips for corporate tax:

Deducting Business Expenses

The true definition of a business expense is the cost of handling the everyday practice of a business. These expenses are eligible for corporate tax deductions, especially if the business is expected to make a profit. To be considered deductible, your expense must be commonly recognized in your industry. Some call this a necessary expense that is very helpful to the business. Some expenses don’t have to be indispensable to be considered necessary. It’s very important they you separate your business expenses from your own personal expenses.

Updating Your Paperwork

It’s very important that you continually update your paperwork, as failure to do so could hurt your corporate standing and your eligibility for legal tax shelters. If your paperwork is in order, then those rental real estate losses are suddenly eligible to be suspended and you can pay the taxes at a later date. You can prove this by showing your income is too high and your profits are classified as income.

Partnership

There is a wide assortment of business partnerships, and they all have different corporate tax codes. General partnership has no limited liability, as all income is eligible for Social Security tax. Each partner reports their share of the profits on their own tax returns. To be considered a limited partnership, you must have one or more general partners and one other limited partner in the corporate agreement. Each partner must report their share profits separately on a tax return. General partners must pay Social Security tax, while limited partners aren’t required to pay.

Lowering Your Tax Rate

Leaders of a corporation can decide to be taxed as one and become a tax shelter for their owners. Most cases, the first $50,000 of taxable income are taxed at 15 percent, and then the next $250,000 can be withheld as accumulated earnings. The corporation should be part of a group partnership, as lower tax brackets and retained earning exemption can be shared equally among the group.

Improve Your Balance Sheet

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Looking for a way to restructure your business's debt? Does your business need a way to increase cash flow, avoid unnecessary fees, lower stress all while improving your balance sheet? Do you need assistance with your debt so that you can continue to grow your business? 

ACT (American Corporate Turnaround) is a company that will help your business grow and help lower your debt.  ACT will be professional and personal to ensure that your business can be productive while lowering your debt and keeping positive relationships with current suppliers and creditors. ACT offers services that will allow you to run your business and add capital all while reducing your debt. ACT is a debt restructuring company that will work with your creditors to help lower your debt as well as improving the financial stability of your business.

ACT will negotiate with your creditors to devise a plan, taking into account current income, crucial expenses as well as worst case scenarios, to create an affordable budget. ACT is a positive way to show your creditors that you are serious about eliminating your debt and growing your business. If your business is struggling and you need a way to improve your balance sheet, ACT is your answer. ACT will work with you to improve your business and ultimately helping you avoid legal fees or bankruptcy. ACT's simple process consists of an uncomplicated application along with a success based fee. ACT is the answer for your debt restructuring needs.

Business Debt Recovery

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It is no secret most small businesses become successful by identifying an unserved market, often of narrow focus, and supplying the need well. The attitude of many entrepreneurs, that they can and will learn to handle any aspect of the business, often serves them well in the beginning but can later become a limitation. It has been said there are two types of people in business, big idea types, and the accountant types who are good at following up daily details. A big idea type person may be fantastic at coming up with ideas for new products, product lines, and bringing these from concept to fruition but can stumble over the daily details such as managing their accounts payable. Business debt recovery firms can be valuable tools in allowing you to refocus on what you do better than anyone else, innovating, making sales, and servicing your customers instead of wasting valuable time and resources servicing business and consumer debt.

Have you ever known someone who pays every bill but always a few days late? If they could just get ahead of all the late fees perhaps they'd have enough money to pay all of them on time. Late fees and even interest charges can compound like a snowball rolling downhill until they seem to be almost insurmountable obstacles. Business debt recovery firms could help you get a handle on the situation and set those same forces back working in your favor.

Would you like to experience less stress? Would a better relationship with suppliers be useful? Perhaps you'd like to redirect the time of valuable employees, or even yourself, currently devoted to juggling creditors, back to generating new ideas and new sources of sales and income? Big idea types can utilize the services of accountant detail types to service business and consumer debt with no need for a desk, training, or medical benefits which means more time and money for what you do best. Business debt recovery services may be just the relief you're looking for. Some recovery firms offer collection services too so you can receive more of the debt customers owe you and set it to work expansively. You could restart the future of your company as early as today.

What you need to know about Debt Restructuring

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Q. What is Debt Restructuring? 

A: Debt restructuring is the process of negotiating new payment terms with existing creditors. American Corporate Turnaround can help satisfy creditors with payments you can truly afford, ultimately avoiding lawsuits and bankruptcy. Restructuring may include reducing the amount owed, stretching out the time period for making payments to creditors or both. 

Q: What does this process do to my company's credit? 

A: If are considering debt negotiation your credit worthiness is already in trouble or shows serious delinquency. This is not a process to save your credit but rather save your business. Once your debt is gone, you can focus on rebuilding your credit. 

Q: Can I negotiate with my creditors on my own? 

A: Debt restructuring programs remove the emotion of you dealing with the creditor. Stress and pressure can impair judgment on decisions. Since we do not have this impairment, we utilize only one method, what is best for you. Furthermore, it is quicker and more efficient than you attempting to do this on your own. Since we create the plan for repayment, creditors feel more comfortable dealing with us knowing we are trying to restore your financial stability.

5 Ways to Gain the Upper Hand in Rate Negotiations

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The truth is, in the business world it is all about perception. How the vendor views you ultimately decides how he will treat you as a customer. Negotiation is a kind of psychological game we play, and like in every game there is a winner and a loser, the person with the upper hand while negotiating wins the game. Moreover, like for every game there are tactics or techniques which help you win, similarly, there are certain negotiation techniques which help you gain an upper hand when negotiating. These are as follows:

1. Every successful negotiator knows the importance of one imperative factor which helps them in getting a good deal. The factor is having a good knowledge regarding prices and rates prevailing in the market. Extensive knowledge regarding the market or at least good preparation of negotiating regarding the specific product gets you very far. The seller would get intimidated or find it hard to manipulate the situation and convince you if you already have a lot of knowledge regarding the product and the prevailing market price of the product, because obviously the reasonable price would be in line with the market price.

2. If you do not have extensive knowledge regarding the product of concern, then another way to gain the upper hand when negotiating is by pretending that you know. Now this is a rather difficult thing to do because even the best of actors can sometimes make it obvious that they do not have much familiarity. The best way to avoid such a situation is to simply gather basic information regarding similar products and the market rates of those products.

3. Confidence is another factor which ultimately determines if you win or lose the negotiation game. You being sure of what you what and being self-assured makes it hard for the other negotiator to manipulate you or deceive you. Confidence gives you the power to control the situation and resultantly, helps you get what you want out of the deal.

4. Another important thing that should be done is cross-questioning. When you cross question the seller, it puts him/her in an unnerving situation and is hard for him/her to answer cautiously and deviously. The numerous questions usually help you in finding out a lot of information which the seller might not have previously voluntarily mentioned. This very act gives you an upper hand when negotiating.

5. Lastly, it is essential to know the power of silence. When negotiating, if the seller puts forward an offer or demands something that is more than what you want to give, the best thing to do is remain silent. Especially when you do not have a lot of knowledge regarding the product and the market price, silence makes the other party get confused and usually leads them on to believe that the offered price is above your range. Thus, being silent and not overbearing leads you to gain an upper hand in negotiations and consequently a better deal.

Myth: 3rd Party Negotiators Will Ruin the Relationship between Customer and Vendor

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Many businesses go through phases of financial strain during their existence. The economy and other outside factors will cause fluctuations in cash flow and profits.  These negative cash flow cycles will provide a need for financial restructuring and negotiation by a third party. There is no need to consider bankruptcy and face the associated financial implications.  You have options that will help restore your profitability.

 

Once of the common myths is that third party negotiators will ruin the relationship between companies and vendors. This is usually due to a company not choosing the right negotiating party.  Third party negotiators like American Corporate Turnaround want both the company, as well as the vendor to experience a win-win situation.  In the current economic environment, many businesses are facing mounting payables with the slowdown of sales.  With the banking community reluctant to lend and credit card lines being reduced, companies are looking for a lifeline with their current vendors.   A third party negotiator will employ a methodology that will create a harmonious relationship between the company and vendor.

Benefits of debt negotiation:

*  Avoid Bankruptcy

*  Soothe relations with current vendors

*  Save time by allowing 3^rd party to handle all negotiations

*  Avoid legal fees

*  Create cash flow

*  Keep necessary supply shipments flowing

*  Salvage company’s credibility

 

At American Corporate Turnaround, our goal is to always preserve the relationship between our clients and vendors. American Corporate Turnaround explores all options that are open.  As we explore our client’s current balance sheet, we will be able to lay out all the alternatives so the correct choice can be made.

American Corporate Turnaround is a 3^rd party mediator between the company and the vendor.  We are experienced financial analysts and we are always striving to get the best result for our clients. As our slogan says “We Make Un-Payables-Payable”.

Business Turnaround

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To encapsulate the purpose behind the functions and the mechanism of turnaround companies, the concept of the term ‘turnaround’ needs to be understood first. Usually a company undergoes a turnaround when a company is facing managerial and financial crises for example increased debt, inability to cover taxes, increased expenses, low sales turnover, decreased profits, low employee motivation, lack of team-spirit among company management, and deteriorating client-company relations. Turning around is a step, mostly an intricate one, taken by the company in order to transform and refocus its managerial and financial aspects of the business into a better and profitable one.

There are various prominent cases present on companies that effectively turned around, McDonald’s and AOL being one of the most well-known. After the merger between Time Warner and AOL, AOL faced adverse impact on their revenues and profitability. The CEOs of Time Warner and AOL collectively adopted various strategies to turnaround the company like making available free content on the AOL portal to attract more online visitors which resultantly increased advertising revenues. Additionally, McDonald’s witnessed a drop in their sales and overall profitability due to their tarnished corporate image and deteriorating quality of operations. In 2003, the company announced turnaround plans and by 2004 they were observing proofs of a successful turnaround of increased profits.

In order to accomplish a successful turnaround, it is necessary to get involved with the right people. There are various service providers which provide step by step assistance in turning around companies in financial and/or managerial crises. The main purpose of existence of such service providers is to help troubled companies effectively deal with their creditors, improve the company’s balance sheet, reduce business debt and resultantly avoid bankruptcy or liquidation.

American Corporate Turnaround is a boutique service provider specializing in accounts payable restructuring. Accounts payable restructuring makes a company more fundable.  This service of Debt Restructuring helps companies improve cash flow and creating a financially healthy foundation for the business to strive. 

The service providers like American Corporate Turnaround take up the responsibility of directly dealing with the creditors, analyzing the financial s and developing a budget to service old debt. Thus, there are numerous benefits of associating with such service providers. Some of them include restructuring of payment modes into more flexible and affordable system, acquiring more time to effectively run the business instead of rushing into bankruptcy, no public record or humiliation, improved financial health of company through reduction in loans but increase in capital, etc. Moreover, most services which offer to facilitate company turnarounds also provide free consultation to the troubled companies. With existence of such a facility and easy availability of professional assistance and help, even small and medium companies should not feel distraught in times of managerial or financial crises. 

1099 Repeal Bill

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As a part of Obama administration’s health care reform, a provision was passed which required the business owners to file a 1099 IRS tax form to report the transactions above $600 each year starting 2012. According to the Small Business & Entrepreneurship (SBE) Council even individuals getting a rental income of above $600 were required to distribute and file 1099s annually.

In the report by the House Committee on Ways and Means, it is highlighted that the tax paper burden that is imposed with the 1099 provision is disproportionate to any of the improvement in tax compliance and thus, the requirement should be completely repealed. The President and CEO of SBE Council, Karen Kerrigan, stated that a need to repeal the 1099 is necessary for small businesses to flourish. According to her, the 1099 provision puts unnecessary burden on businesses which are trying to expand and invest.

When the 1099 tax provision was announced, a majority of the population argues that it would be a hindrance in the development of individually owned business, as well as the small and medium companies. The adherence to the provision was viewed as being something superfluous and the cost associated with filing of 1099 form was estimated to be too high for the small companies and entrepreneurs to bear. It was estimated that 40% of the emerging small businesses would have had to shut down operations. This would be due to the fact that the cost not only the cost, but additionally it requires the small companies to pay large sums of money to hire professional help for the proper filing of the 1099 tax forms.

Therefore, it was a celebratory day for everyone when the announcement was made that the 1099 repeal bill was passed with bi-partisan voting. 70% of the House members supported the repealing of the 1099 provision. Another fact that made people optimistic about the 1099 repeal bill is that the President himself stated that the 1099 requirement is something that can be compromised upon.

However, it should be mentioned that the Senate’s version of the 1099 repeal bill only addresses the health care law requirement of 1099 and not the rental income requirement. Moreover, the Senate would pay for the repeal by cancelling $44 billion from government’s discretionary spending. The White House, in a statement regarding administration policy, stated that it supports the repeal 1099 bill but it opposes the way HR4 would pay for the repeal.

Furthermore, the opponents of the repeal highlighted the need to determine the source of the revenue to make up for the loss that would be incurred by the government in tax returns. It is estimated by the staff of the Joint Committee on Taxation that the repeal would add more than $21.9 billion to the federal budget deficits over the period of 2011 to 2021. Senators like Carl Levin of Michigan have already started presenting amendments to cover for the potential revenue loss by suggesting introducing additional tax on oil companies.

Should I Outsource Freight Bills?

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 Prior to 1980 the transportation marketplace was very heavily regulated. The National Association of Freight Payment Banks was established to keep track of all the freight bills and to ensure banking requirements were being met by the shippers and the carriers. There were regulated parameters for credit extension in accordance to which the freight bill settlement was based upon.

In 1980, the transportation industry was deregulated, which allowed for the carriers and shippers to negotiate credit payment terms. Even though this deregulation added to the flexibility of firms to negotiate credit payment period, it also required them to follow a vigorous process of pre-auditing before freight payment is conducted. The process generally requires a verification of freight rates, accounts of previous payments, liability checks of shippers and validation of freight payment requirements. 

In order to avoid the hassle of going through this process, many companies outsource freight bills. Outsourcing generally saves the company money in three major areas:

• Reduction in cost of payment to account payables department and
• Cost of processing
• Reduction in accounting errors

There are various companies which offer the outsourcing of freight billing and auditing. By shifting the responsibility and hassle to these firms offering such services, this allows the business to focus on their core competences and not waste time and resources on processes that can be better managed by others at lower costs.

These outsourcing companies can reduce the occurrence of errors which ultimately costs the business considerable outlay. There will be reduction in duplicate entry of bills incorrect freight rates. Moreover, they will provide additional services apart from the basic freight billing like customized information regarding your accounts management. Periodic reports, carrier usage information and extensive professional information on freight related issues will facilitate the business in making informed decisions.

Regardless of the advantages, there are aspects which need to be kept in mind before outsourcing your freight bills. The company who is providing the services should be ISO certified and have proper certification and expertise in the field of accounts payable management. Also the firm should provide good customer service and efficiently resolve issues related to freight payment. 

Please note that the one of the main issues concerning outsourcing freight bills is that to insure a cohesive carrier-shipper relationship. In order to establish this point, companies, before outsourcing, should make sure that the service providers also ensure good carrier relationship management. To conclude, please keep in mind the possible issues that can be encountered along with the positive aspects of outsourcing freight bills. After weighing the pluses and minuses, it is clear that the smart decision is to outsource the service and focus time and resources on the core competencies of the company.

You can visit me in American Corporate Turnaround.