Payable Restructuring
process is the same regardless who does it. Here's the six steps
to restructure your
accounts payable .
If you're interested in some additional input we'd like to hear from you.
Call the key vendors and tell them you're preparing a payment plan that will successfully work.
Get the value of all that's owed to all of the vendors. Sort the vendors in descending order and figure out what per cent each of them is as a part of whole. Call the vendors that make up 80% of all of the vendors. See what to say to your vendor for a pretty good idea.
Follow that up with an email more fully stating your intentions.
Some of the conversations may not be good and they may be brief or truncated. That's what the email is for. The email can be more complete although don't make it too long either. And send the email to more than just the person you talked to.
Tell them the plan will be complete on a specifc date -
not earlier than 7 days and not later than 14 days from the call.
You've got to communicate to payable vendors who are owed 80% of the money .
The first thing to attack is the top 80% of the money stuck in payables. Probably only 20% of the vendors or less make up the vendors who are owed the money.
Telephone discussion and email.
That's it - figure out where most of the money is - call them first with personal visits to those who matter the most (and aren't too expensive to get to) and then follow up with emails to all those who count.
factor in the new reality of collections
Your customers are paying slow too. No one is sticking to terms, and some are even still taking cash discounts. Make sure you integrate this unfortunate and new set of circumstances.
what's the real expenses including all the taxes?
Make sure you get the real and accurate set of expenses. You have to get them all.
If necessary make expenses less than cash in by at least a little.
you've got to have positive cash flow in the plan - maybe not immediately but quickly. It's the positive cash flow that let's you keep current with expenses and pay a little bit or more to the old payables in the payment plan you're offering!
now you have a viable plan.
if you've followed the above steps - you've got a viable plan and you know it.
your information needs to be simple yet comprehensive
Some of the key people that will review your materials are executives. They're not going to study pages of material to figure out what you're saying. On the other hand they're sophisticated too (assumedly) and they know what they're looking for so diminimus information won't do either.
you need projections including a simple P&L, a cash projection, and a simple balance sheet.
You've got to have a profit and loss statement. You've got to have a cash flow projection and finally you need to have a mini-balance sheet. If you don't have that stuff or know what they are or how to create them you gotta have someone help you. If you don't then you're at the whim of whoever is at the other end. Your choice.
Deliver everything in a summarized fashion. But have the detail if you need to review or even supply.
Summarize. Be comprehensive. Summarize. Be comprehensive. Summarize. Be comprehensive. Summarize. Be comprehensive. Summarize. Be comprehensive. Summarize. Be comprehensive.
the stuff has got to look good
If you deliver a mess it will be trated like one. You got to have decent or better yet - good looking documents - that look and therefore seem to be professional. If you look and act and are professional someone might believe what is on the pages your promoting.
Face to face is tough but best to convey your commitment and gain from that expression.
The best opportunity to state your case is in person. The demonstration of your commitment is invaluable. Showing up in person is part of that expression. Also seeing the reactions and adapting your pitch to them is invaluable.
commitment, fairness, and tenacity are the characteristics to deliver.
The vendors need to believe you're committed to the plan and that they have been treated fairly in this distress, and finally that you have the capability to deliver.
Any opportunity to relieve payables has to be highly regarded.
You're going in with one deal - however they may propose another deal. It may be quite different - maybe quite similar. Regardless the timeframe for acceptance is usually quick - so make the deals you can and make them effective quickly.
If there's any counter-offer seriously and quickly consider it. Counter again if
you think you've got more room. You don't have to be pressured into anything - just state "I want to talk this over with my (insert one ... accountant, lawyer, team) - I'll get back to you (insert one ... this afternoon, the end of the day, tomorrow, the end of the week, first part of next week).
Formalize the deals quickly.
Don't get lawyers involved. Draft a simple letter format that SIMPLY states what you're committing to. Make sure it's complete - that's the key - but keep it simple and short. Be nice, don't truncate, nor abbreviate.
Stick to the deals.
absolutely, defenitely, at least for the first 2-3 months - MINIMUM!