Friday, September 20, 2019

Flat Fee vs. Percentage of Savings

My associates and colleagues know I have been a long-time proponent and advocate for flat fees and/ or capped fees in this profession.

When I created my company in 1997, there was very little competition in the Commercial Debt Resolution profession and most everyone was charging a percentage of savings for settlements.  That percentage typically ranged between 25% to 35% of the amount saved on a claim for a debtor company.  The sales pitch went something like:

"Hey, this puts me on the same side of the table as my client since the more I save them, the more I make.  So, my incentive is to save them as much as possible.  All parties win with a successful settlement."

Makes sense, right?

Well, I quickly found the EXACT OPPOSITE was usually true.

Consider a client with a $100,000 claim and a fee set at 30% of savings.  If I can negotiate a $40,000 settlement, I just saved my client $60,000 on the claim.  Unfortunately, I just created a new debt with my $18,000 fee ($60,000 x .30).  Sure, the net savings for my client is $42,000 but now they have to figure out how to pay me $18,000.

My initial resolution to this issue was to cap my fee and continue to charge a percentage of savings.  This helped to avoid any fee "sticker shock" for my client at the end of settlement negotiations.  I still utilize this fee structure for certain cases where it makes sense and it continues to be well received.

However, most of my cases are worked on a fair and reasonable flat fee basis so there is absolutely no uncertainty regarding my fee from beginning to end of negotiations.  This fee is agreed upon after consulting with a prospective client and is based on the size and complexity of each case.  After negotiating hundreds (if not thousands) of settlements over the past 21 years, I usually know what to expect once I gather some background on a claim.  An upfront fully refundable retainer is typically required before I begin negotiations which also makes payment of the balance of my fee easier at the end of a successful settlement negotiation.

A flat fee also makes sense for cases where only a payment arrangement is negotiated with no discount.

I encourage all prospective debt settlement clients to question any proposed open-ended percentage of savings fee that does not include a cap.  Nobody wants to resolve one problem debt just to create another.

Scott F. Soape

Thursday, June 27, 2019

Communication is Key

Many of the past due debt situations I encounter could have been avoided with better communication between the parties.

Most commercial creditors are willing to be flexible with repayment if they are kept informed of a debtor company's financial situation when times are difficult. These problems usually are the result of not being paid in a timely manner on their own accounts receivable, causing a domino effect.

When communication stops, commercial creditors have little choice but to escalate collection actions by sending demand letters, retaining outside collection agencies or attorneys and, eventually, filing lawsuits to collect. By keeping the lines of communication open and explaining the reasons for late payments, a business owner can often avoid or delay these stepped up collection actions and retain desired relationships while they work to get their finances in order.

Scott F. Soape

Tuesday, December 11, 2018

Settled at 10% of the Debt

A previous client recently approached me with a business related credit card debt.  The collection agency pursuing the claim represented a Visa account for a national bank that my client owed over $22,000 for an old write off.


My initial skilled negotiation efforts resulted in a 65% discount if my client could make a lump-sum payment of $7,700.  Under normal circumstances, this would be considered a nice settlement but my client and I knew this was an old claim and the creditor had few options for enforcing payment.  It did not take long for me to negotiate an additional 10% discount for a total payment of $5,500 (25% of the debt).


Not willing to abandon my efforts despite these favorable results, I continued to press and fight for a lower amount on behalf of my client and worked my way up the chain of authority with the collection agency.


Negotiations lasted several weeks but the final result of my efforts was a settlement for my client in the total amount of $2,200 on the $22,000 debt... or 10 cents on the dollar.


Every claim is different, but each and every one of my clients may always be assured my best efforts possible to reach the lowest settlement with the most favorable payment terms on their behalf.

Wednesday, May 2, 2018

Suspending New Program Sales

Effective immediately, I am suspending new sales of my Business Plan System and Associate Program.


Although helping people new to this profession get up and running has been very rewarding over the years, my core practice has grown to the point I am no longer able to divide my attention between the two.  Please be assured, I will continue to support and assist those folks that have already invested in my programs.  Those that have previously expressed an interest but not yet purchased the material may contact my office directly if they wish to proceed.


Best wishes to all!


Scott F. Soape

Sunday, March 4, 2018

Another Company Rescued!

It is always gratifying when I am able to assist a business owner with problem debts and lessen their financial burden. Often, this can make the difference between continuing business operations or closing the doors.


A case I closed this week not only allowed a business to remain open, it also allowed the owner to avoid declaring personal bankruptcy.


My HVAC client was dealing with a $213,000 business debt that had escalated to a lawsuit... and the owner was on the hook personally. A judgment would have devastated the company and the owner.


I was able to convince the commercial creditor to accept an out of court settlement in the total amount of $30,000, payable in 60 monthly installments of $500 each at 0% interest.


Considering they could have been awarded attorney fees claimed of $25,000 in addition to the principal debt, court costs and back interest, total savings to my client was over $210,000.


Of course, not all of my negotiations work out this well but I have maintained a near 100% success rate over 20 years assisting my commercial clients with their problem and disputed debts.

Wednesday, November 1, 2017

20 Years Assisting Business Owners


This month, my firm celebrates our 20th anniversary with much appreciation to our many satisfied clients.  Below is our recent press release with the official announcement:


Scott F. Soape & Associates, LLC celebrates 20 years in business.

 

Georgetown resident and entrepreneur, Scott Soape, has provided commercial debt resolution services to small and medium size businesses nationwide for 20 years.   Soape assists business owners with their past due or disputed debts, judgments, liens or lawsuits by negotiating manageable payment plans on their behalf with their commercial creditors.  Since founding his unique consulting practice in 1997, Scott has assisted hundreds of businesses resolve their problem payable accounts, helping many to keep their doors open for continued business and avoiding the need to lay off employees.

 

According to Soape, most of his business clients are simply experiencing temporary cash flow difficulties, usually because they are waiting for payments themselves, and just need a little relief from their creditors until business picks up or payments are received.  As a highly skilled negotiator and work-out specialist, Scott helps restructure commercial debts so his clients may more easily manage these payments and concentrate on running their business operations.

 

A Houston native, Scott Soape has lived and worked in the Austin area since graduating from the School of Business at the University of Texas.  With an extensive background in local banking and financial consulting, Soape draws upon over 35 years of business experience in assisting his clients with their commercial debt resolution needs.

 
            More information on Scott and his service may be found by visiting his company website at www.SFSoapeAssoc.com.

Thursday, April 20, 2017

Credit Score Changes Are Coming Soon

Some big changes are scheduled to how credit scores are calculated.  It is always a good idea to know how you rank and I encourage everyone to check their scores at least annually through the free online site www.annualcreditreport.com.


However, you now need to be aware of the new ways your score will be calculated and possibly change how you manage your debts.


Please click on the below link and a brief article explaining these new calculations:


http://www.newsmax.com/Finance/Economy/Changes-Credit-Score-Calculated/2017/04/20/id/785375/


Scott F. Soape