Most entrepreneurs have to deal with cash flow issues at one point in their lifecycle. Unfortunately, this often leads to a daily struggle of following outstanding payments and juggling creditors. Eventually, you may find yourself missing financial obligations to your creditors. So, while you may try all means to settle your debts, it’s always a good idea to communicate with creditors.
Here are a few benefits of communicating with your creditors:
You may be able to reduce what you owe
Speaking with your creditors is an excellent opportunity to tell your full story and review the specifics. Sometimes, creditors may pursue you for a larger amount than you owe or even someone else’s debts. Therefore, communicating with your creditors will help you point out any mistakes.
You can negotiate for more time
When facing a cash flow crisis, communicating with your creditors will allow you to request an extension of the payment terms. When you negotiate for more time to repay your debt, you’ll automatically receive an interest-free loan, which will give you some breathing space. Remember to communicate your payment plan when negotiating so that your creditor does not doubt your ability to pay.
You can suggest making partial payments
Like you, your creditors are also people trying to run their businesses. Sometimes, they will need money just as much as you do. However, if you cannot make the full payment on time, it would be a good idea to suggest making partial payments.
Making partial payments will prove to your creditors that you’re not trying to escape paying your debt and are trying to meet your financial obligations. Partial payments are more acceptable over nothing and will help keep your creditors at bay.
Ultimately, you may not be successful at mitigating your debt or the problems with your creditors. In those situations, it may be wise to explore other debt-relief options, including bankruptcy.