Corporate Debt Management General Information

Unprofitability. Bankruptcy. Liability. These words are undesirable for every business. Neverheless we met them very often. How to avoid the negative effects for business? Competent corporate debt management can help in this case.

First of all, let's define some terms. Debt – are financial obligations or liabilities to be paid by Debtor at a certain time. Any credit debt is characterized by the presence of the debtor or the creditor, the amount of debt and the liability date. Thus, it is possible to define "debt management" – as a set of measures aimed at compliance by all parties to the treaty obligations as well as preventing the emergence of arrears

Proper debt management during the crisis will make it possible to keep the company working and prevent its liquidation. But real understanding of the situation with the corporate debt to creditors and the possibility of obtaining receivables requires a comprehensive analysis of the current state of affairs.

Successful debt management must include two main stages:

  1. Signing advantageous contracts between counter parties .
  2. For example, when drawing up the contract with the creditors is desirable to set the highest possible debt maturity. You must also be prepared to confirm the lender solvency of the enterprise.
  3. Debt maturities control .
  4. This is one of the most complex and labor-consuming processes to be automated. The most obvious way of controlling well-timed payments – is record keeping, for example, the current cash position of the company (a document showing the repayment of debt by maturity).

Record keeping gives an opportunity to monitor the timely repayment of debt, and plan for the distribution of funds of the company, to predict and prevent so-called "cash gaps" – the days when there is not enough money to pay off debt.

Any if cash cash has occurred records and documentation will help you. The first thing you must do – is to make a database of primary and secondary lenders by the consequences of non-payment. The second step is re-examination of contracts for inaccuracies, which may potentially be used in negotiations with creditors. Your next action should be identifying all future imports and expenses of the company. After analysis of the data is important to note the possibility of reducing the obligations to creditors.

The main argument during the negotiations – is giving the lender different options of the company liquidation and benefits after this process. Negotiations between creditors and debtors is rather long and hard process. In order to make picture clear it is needful to involve lawyers and financiers in to debtors and lenders negotiations.

Source by John Logen

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