Take a personal approach when you can’t pay bills, Smith advises

Ken Smith

With little money coming in, many furniture retailers have no means to pay their suppliers. And the funds from most Small Business Administration loans can only be used for payroll, mortgage interest or rent and utilities – not for the cost of products just sitting in the warehouse.

Retailers need grace to defer payments until conditions improve.

Banks, credit unions, other lenders and governments require businesses and individuals that can’t meet deadlines to file deferred payment request forms. Furniture retailers who owe money to vendors, manufacturers, importers and others can take the same formal approach.

But Ken Smith of Smith Leonard Accountants & Consultants in High Point, N.C., says a personal approach can be more effective. Smith’s practice focuses on the furniture industry, where relationships matter.

Better off communicating

“You’re much better off communicating than you are not,” he said. “If you stonewall, that’s not going to go over very well. Your best shot is to ask for extended credit terms.”

That can be done by phone or by letter, Smith said. While the cause of financial distress today is obvious, it’s helpful to explain what steps you’ve taken to address it. For example, you should disclose whether you’ve applied for Small Business Administration loans or other relief. If you expect help from state and federal tax breaks, give that information. Whatever business adjustments you’ve made to improve your position should be part of the conversation.

Everyone is having similar problems and should understand accommodations must be made, said Smith, who conducts a monthly survey of new home furnishings orders.

“Somehow, we’ve got to live with this until it eases up, and we don’t know when it’s going to ease up,” he said.

 

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