Why is it important to keep good relationships with creditors
Maintaining a positive working relationship with creditors is essential to a company’s success. Failure to do so might result in unmanageable debt and the unwelcome prospect of liquidation. Knowing how to deal with creditors is a skill that can be learned fast, and we’ll look at a variety of reasons why it may be the difference between success and failure.
Maintaining a balance between when you have to pay creditors and when you get payment from your customers is critical to your company’s cash flow. Having a solid rapport with your creditors may allow you to extend credit beyond the amount owed, allowing you to lower the amount of working capital needed to run your firm. This is especially important during times of expansion, when there are more funds available to take advantage of economic prospects.
In times of financial trouble, the benefits of having a trustworthy connection are sometimes most apparent. One of the most obvious signs that a corporation is trading whilst insolvent is the inability to pay bills on time or repeatedly paying them late. Creditors may be worried that your business is going to be put into voluntary administration or even liquidation.
Good communication with creditors is critical, but our focus here will be on how to properly handle creditors during times of financial distress. If you are unable to pay your invoices or financial obligations, you should contact creditors as soon as possible rather than waiting for them to contact you after the lack of payment becomes a problem and escalates further.
Implementing the communication tactics discussed above lays the groundwork for productive negotiation with creditors. Before contacting a creditor about an existing debt, you should first figure out how much the debt is and how much you can afford to pay over time.
If you would like help managing your creditors then contact Australian Company Liquidations. We are registered company liquidators who offer a FREE 24/7 insolvency hotline for Australian directors seeking expert advice. Call us on 1800 981 070.