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5 Tips to Better Manage Corporate Debt and Financing Relationships

5 Tips to Better Manage Corporate Debt and Financing Relationships

Line of credit, a term loan, or some other bank credit provision. If you have any one of these tied to your bank account (or plan to in the near future), take solace in these five tips to better manage your corporate debt as you scale your business.   1. Negotiate better interest rates with your lenders Move away from the idea of being just “the applicant” and get the lenders competing for your business. Let the lender know you are surveying the market to find a financing plan that specifically fits you. The conversation might sound something like  “Tom, we are in the midst of interviewing a number of banks to see who we want to work with. May we ask a few questions to see if your institution is a good fit for us?”   2. Negotiate an amortization schedule that fits you The longer you pay off the loan, the lower the payment will be. A loan amortized over five years will require a lower payment than a loan amortized over two. A loan amortized over ten years will require a lower payment than a loan… Well, you get the point. The goal is to minimize your required payment to protect your cash-flow in the event there is a short term dip in your business. But be on the watch for hidden fees (see below).   3. Discuss eliminating hidden fees Be mindful of the small print and negotiate strongly to eliminate (or at least minimize) hidden bank fees. Looks for things like “origination fees,” “payment processing fees,” “automatic rate increases,” and “prepayment penalties.”   4....
Three Things to Know Before Merging With a Competitor

Three Things to Know Before Merging With a Competitor

Much like a marriage, merging companies can include the best and worst of times. It’s on us to decide whether or not our potential partner is a good fit. Take a look at these three points before you say “I do.”   1. Get the Facts Straight Do your due-diligence. Never go into the merger without a clear understanding of the terms in play. What are they? How will they be executed after the deal is signed? These questions need to be answered. Try to visualize life after the deal, even the day-to-day. These issues can and have been notoriously overlooked, which have cost companies millions.   2. Look for a Mesh in Company Culture You really have to know your potential partner – after all, this is corporate marriage we’re talking about. It’s important to examine cultural issues as closely as the numbers. Although it’s not on the balance sheet, it’s just as important. We keep going back to marriage, but the analogy rings true – if you partner up with someone with differing views, you are poised for disaster. While it’s not always easy, you must integrate culture as best you can to sustain a long-lasting relationship.   3. Plan for Worst Case Scenario First, be aware that things can go wrong – or at least not as good as you hoped. If you own a business, you will need to accept and live with this fact. Just like it’s smart to have a prenuptial agreement in a marriage, it’s also smart to have an exit strategy for your company. Nobody wants to think about divorce, but it’s...