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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Snowshoe who wrote (82316)	10/29/2011 3:08:33 AM
From: Maurice Winn	2 Recommendations Respond to of 218246

Very well thanks: <How did you handle deadbeats? Ever negotiate any loan restructuring, partial forgiveness, etc. > When taking over an area, it might have very bad credit but it was surprising how easy it was to tighten things up over half year or so and get everyone onto normal payments or cash before delivery or leave them with 90 days credit [if the money was safe and the margins justified such]. Mostly, people just need managing. The deadbeats don't want to get into trouble. They just can't self-manage. It's like handling children. Friendly, firm, no misbehaviour, reward good behaviour, be helpful, find ways for them to succeed. It's far easier to avoid bad debts in the first place than tidy up messes after it has gone off the rails. Bad payers show up like beacons in the dark if attuned to people. Credit management was fun and also a really good way to get and keep customers - any excuse to interact with customers is good and that includes bad debts. At one stage, I think I had what would have been the best credit situation of anyone anywhere on Earth in the oil industry. But life is a little more complicated than just having prompt payment. For example, in Canada I had a customer who liked having 90 days credit. I gave them negligible discount. They were happy and I was happy and Texaco had huge margins there. But the stupid Texaco accountants had an obsession with having accounts current [they are weak on thinking and strong on rules]. The customer was rock solid financially, so there was no risk. They just liked using other people's money and thought they were getting away with something. Far be it from me to rock the boat. I warned Texaco [my bosses and the accountants] that if they messed with the customer's extended credit, the customer would get stroppy and ask other suppliers for quotes and we would be forced to cut our prices dramatically. They ignored me and refused extended credit. The customer did as I said they would do and sure enough, we ended up giving away a huge amount in discount which far exceeded the value of the faster payments. In commercial lending, such things happen as you described, and it's generally called "trading your way out of it". I was against just slamming the door, delivering a section 218 notice and calling the insolvency people. Gentle but firm and friendly management over a year can resolve a lot of problems. It was only when taking over a mess that such problems arose. When in control, such things can be avoided by understanding people. One guy once deliberately got away with 60L of lubricant from me which is a trivially tiny amount of bad debt. It was the only time I ever got taken. It was insignificant. I pretty much gave it to him as bait to test him as he was dodgy at the start as a new customer. He wanted more but that was all he got. Mqurice

To: Snowshoe who wrote (82316)	10/29/2011 12:52:09 PM
From: Ilaine	1 Recommendation Respond to of 218246

Bank negotiated a deal to write down 60% of the balance in return for a 40% lump sum payment. Advantages: bank got "something" Once your friend defaulted, and the interest rate was jacked to say, 28%, and he was hit with late fees every month, if he continued to make the minimum payment for several years, the bank got paid back more than double, maybe triple, what he borrowed. This is their business model. These are their biggest paying customers. Credit defaulters then can only borrow at obscene rates, but they keep going back for more because they just don't learn. I keep recommending that people read and/or watch Maxed Out. Have you done it yet? You can watch on Netflix or Amazon prime on demand, probably your public library has the book and maybe the DVD. Maxed out : hard times, easy credit, and the era of predatory lenders amazon.com As for commercial lending, you can negotiate discounts if you are willing to pay a lump sum. For both personal credit and commercial credit, if the lender reports the writeoff to IRS, you will owe income tax on the forgiven debt. That always comes as a great shock. Why pay income tax on money you didn't get? Well, you did get it, and you did not pay it back, so it's income.