If the company is unable to fulfill its obligations within the specified deadlines, tense situations may arise both in negotiations with financial creditors and suppliers. In this article, we have compiled a list of recommendations for what to do in the following cases:

1. Understand the reasons
An entrepreneur should thoroughly delve into the company's financial data - balance sheet, profit or loss statement and cash flow statement. It is important to be aware of the company's current financial position and what has caused the current cash flow problems. In later communication with your creditors, it is important to be able to identify the causes of the problem in order to then propose a solution to fix it.

2. Identifies the solution
Once the cash flow problem is identified, an action plan is developed to get out of the situation. Such a plan can be related to cost reduction (for example, giving up less important expenses, reducing the number of employees), giving up unfavorable orders or selling assets (unused or unencumbered fixed assets, inventory or stock). In case of overdue receivables, look for a solution with debt collection companies and draw conclusions on how to change the receivables control policy in order to avoid similar problems in the future. There are companies that also purchase delinquent accounts receivable.

3. Go out for talks
Realizing that the company will not be able to pay the creditors, the best thing the company can do is to warn the creditor as soon as possible about the situation. Both lenders and trading partners have a great interest in ensuring that the company can survive the crisis, and will almost always be ready to make compromises in payments in order to help the company in such a situation. In these conversations, it is extremely important to communicate the analysis of the situation (reasons) and solutions - the first two preparatory steps described above. If possible, create your desired payment plan in advance to offer the creditor a ready-made solution.

In conclusion, if the company is not or feels that it will not be able to settle its obligations, it is recommended to start negotiations with its creditors in a timely and proactive manner. It is important in the eyes of creditors to see that the company comes to such negotiations prepared and with a plan. In its long history of financing companies, Capitalia has seen that with such a pragmatic approach it is possible to find a way out of even the most difficult situations and ensure the company's longevity.