If you can’t pay…don’t!

Houston, we have a problem!

People are mixing moral attitude with business decisions and while there may be a time and a place for this moral issue to be discussed and even incorporated in your business life, one thing is for certain…business debt is not a moral issue or decision when you do not have the cash. Its a reality and default is not a sin its a part of business.

If you can’t pay…don’t. Its that simple.

I understand, everyone wants to pay their bills. Of course.

Everyone believes they should pay their bills, it’s perceived as a measuring stick of ones character they say! I do not think this is the case. Its a measuring stick of how large your check book is. How much cash you can control and what  your priorities are in utilizing that cash?

If your business is in trouble, revenues down, overhead crushing you, debt killing you, and you have some cash flow, I see many business owners juggling their revenues for the benefit of paying as many bills as they can…before they crash and burn completely.

NO NO NO I say, we must stop this, as it is not the right path, despite our deep belief that we should pay our bills, the question really is do we have an option here. if there is inadequate capital and the business is declining then not paying your bills may not be a decision it may simply be a reality, if we can’t, we can’t.

If you see the handwriting on the wall which is easy, its when you cannot pay all your bills and your revenue has declined, what is the point of paying any of them? What difference is it if you pay this month and fail next month? Perhaps you should be considering other priorities like your family, your home, your other options…maybe you should be thinking of an exit strategy, a workout plan, a new business opportunity.

But so many in this situation, do everything possible to pay the business bills, with a check book too small to suffice.

Whats the point? Why do we do this? What does it get anyone? One more payment, is that the goal, to die trying is that the objective so somehow we can say we did our best???

I do not think so at all. Doing our best does not require us to commit suicide. It does not require us to put our family below the importance of a creditor, it does not require us to lose our home as opposed to paying the telephone bill or the bank.

Remember business issues are just that, business issues, profit motivated and a two way relationship. We must stop taking full responsibility for the outcome, our creditors are part of this deal, they extended credit and therefore accepted he risk of failure. Did we sign on saying we would kill ourselves and our family to pay the bill for one more month. I do not think so.

I am not saying we should lie, cheat, and steal from our creditors, not at all, if we bought something we should pay, if we can. But I am saying when we can’t pay we need to recognize this reality and make broad based decisions including who to pay, when to stop paying and what to do with the cash that is available…and I further believe that this decision does not start and end with dedicating 100% of your cash availability to paying down business debt until there is nothing left and you and your family and your employees are out on the street. NO.

There are more responsible decisions to be made. Paying til you drop is all about ego, satisfying your self perception that you can and will pay your bills or die trying. Silly.

One simple rule, If you cannot pay…do not. You need a plan , a workout, but not a pay till you drop attitude, that’s plain foolish.

Loose the self importance, the ‘this is what I must do’ attitude, its silly and you have bigger obligations to consider. Being responsible is not about running into a burning house to save some artifacts and finding yourself in the hospital burned to a crisp…No its about letting the house burn down and saving your family, life and other important aspects, all more important then the things. The creditors will find a way to survive, you will not.

If you can’t pay the bills…don’t.

It is a measuring stick …of maturity and appropriate decision making, …character.