Click to verify BBB accreditation and to see a BBB report.

Press Release 01/13/2007





Post-Holiday-Season Options for Independent Mich. Retailers

Year-End Sales Fell Short?  Debt Settlement Can Help  

By Steve Newman, Guest Columnist  

The 2006 holiday season is behind us, and year-end sales results tell the story: While many retailers (especially independents) often rely on strong year-end sales numbers to �make their year,� not everyone got them in 2006.  As a result, it can be difficult to pay vendors and other bills at the start of the year.  

If you�re in this boat, what are your options?  You probably have already cut costs to the bone. If you sell off key assets, customer and employee satisfaction are likely to falter.  Bankruptcy or a store closing may seem like your only remaining routes.  But there is an alternative to these and other drastic steps: debt settlement.  

While it�s not widely known among the state�s independent retailers, your creditors are often willing to settle past-due debts for less than the full balance owed.  Why is that?  

More than ever, manufacturers and other suppliers realize that their fortunes are tied to those of the retailers who sell or use their products.  Most of them are willing to accept a portion of what they�re owed in order to help a good retail client get back to financial health�so that the retailer can continue buying from them.  

How much can debt settlement reduce a company�s payables?  If you hire an experienced, professional negotiator who deals with each creditor individually, some of your debts could shrink by as much as 70% (that is, you would pay only 30% of the outstanding balance, without borrowing money).  Look for a negotiator who will handle all calls and letters from creditors�allowing you to focus on rebuilding sales and curbing expenses.  

A key question that any retailer should ask a debt-settlement firm is how it earns and collects its fees.  Ideally, the fees should be based solely on the dollar amount of debt savings achieved for the client.  This makes debt settlement a virtually �risk-free� solution for the client: no fee to pay until all negotiations are completed.  

That�s not to say that debt settlement is perfect, or appropriate for all companies� financial situations.  It�s not for a financially stable business that simply wants to reduce its monthly payments.  Instead, it�s primarily for companies already behind on their payments and looking to make a fresh start.  Because they are �in arrears� on their debts, these firms� Dun & Bradstreet (or similar) ratings usually have already dropped.  Debt settlement activity may initially lower these ratings further, but in most cases it also proves to be the first step in rebuilding the client�s rating�precisely because payments are now being made where they weren�t before.  

When a retailer starts missing payments, its vendors may require that the store switch to C.O.D. terms.  This can be difficult for the company because in most cases it is largely a cash business with relatively thin profit margins.  Debt settlement can help by reducing the store�s total debt load, freeing up the cash needed to make the C.O.D. arrangement work.  

As smaller vendors are more likely to resist the idea of settling a debt at a discount, it�s usually best to work out settlements with larger vendors first.  The savings achieved sometimes make it unnecessary to settle the small-vendor debts.  Or, the larger settlements can be used as examples to persuade smaller vendors to join in the settlement program.  

Coming just after the holiday season, the first quarter of each year is when many �on-the-bubble� Michigan retailers must decide whether to restructure, file bankruptcy, or shut down entirely.  Before committing to any of these options�which are usually expensive, stressful, and quite public�it just makes sense to look into debt settlement.

Steve Newman is Principal of Performance Source Inc (PSI).  Since 1963, PSI has helped thousands of clients save millions of dollars and satisfy their creditors without borrowing money.  Under the company�s risk-free process, clients decide which payables they want PSI to negotiate, they approve (or decline) all proposed settlements in advance, and owe PSI nothing if a settlement is not reached or not accepted.  And because PSI also handles all contact with clients� creditors, clients are able to focus on growing their businesses.  Steve can be reached at 800/883-5080, or  The company�s web site is