A Troubled Laundry, With No Room To Maneuver

Lend Yourself Some Free Money! Most creditors, including utilities and landlords, are understanding if they are paid a little late, but they do get nervous and uppity once invoices get to be over 60 days old. So, if you pay within 45-50 days, you probably won’t get much grief. If you adopt a 45 day pay policy, instead of 30 days, it gives you half a months worth of expenses to work with as cash, and is equal to them extending you half a months worth of bills as an interest free loan. What is half of your regular monthly bills? How much pressure would that take off, and for how long? It won’t work if you’re already behind and in trouble. It’s dangerous too, unless you can see staying at least that current over future months. If not, all that happens is you end up further and further behind. Can some debt be rescheduled? Many operators owe for notes on the laundry and/or for equipment they have purchased. A surprising number of note holders are sympathetic when special circumstances have placed the laundry in economic jeopardy. The old owner usually doesn’t want to take back the laundry, and often will make concessions for payments. Finance companies don’t want to take the equipment back either. By being up front about the problems you face, it may be possible to create wiggle room by extending the note period, lowering interest or asking to skip payments for a limited time. It may also be possible to get the landlord to extend some courtesies with the rents and CAMs. Requests are more likely to be acted on favorably if you say it looks like we’re running into trouble, instead of saying, “You may be wondering why I’m two months behind.” If you let creditors see that you know you are running into trouble; you recognize what the problems are, and are trying to work things out, they may just want to help you out. They could be helping you do that for their own benefit. If you’re already in trouble with them, it may be too late to negotiate. The natural reaction when someone gets into serious financial difficulties is to be embarrassed and to keep it a secret. That’s OK as far as the general public is concerned, but the note holders and landlord are, in a way, financial partners of yours. You do well, they get their money. You don’t do well, they don’t get paid back. Don’t be afraid to speak about the problem honestly. It’s surprising how many creditors will work with up front business owners who are honest and open about a bad situation. Suppose it’s too far gone to save? If you conclude that things have gone too far to make it, get out fast and end the agony. You will stop creating debt and will soon learn exactly what your total obligations are. Look at it as a temporary defeat, not the end of your war for financial security. You will just have to be smarter next time.