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LETS GET DOWN TO BUSINESS.

Question :
Help! My colleague rents beauty equipment and the hire place will not budge on the ongoing costs, over $2000 since lockdown began, the subsidy needs to go towards her mortgage not equipment at her salon that she is unable to enter. Zero cashflow coming in like everyone else, any information on how to approach this hire company AGAIN would be much appreciated. Her business is simply not going to survive this cost at $350 a week. 

Question submitted 04/05/20 @ 10:28am
Industry: Services
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    Hi,
    Your colleague’s predicament is very understandable.

    I suggest your colleague reviews the hire purchase agreement to see what rights are available to temporarily suspend or terminate the agreement. Is there an agreement in writing? Is it possible to terminate and restart the agreement after lockdown?

    Assuming its a fixed term written agreement then the next step is to approach the hire company in person (keeping social distancing in mind) or virtually to negotiate a discount or rebate on the weekly hire cost.

    Remember the hire company is probably in the same boat as your colleague. You can’t simply pass the cashflow problem to them – what can you offer the hire company to make it attractive for them to negotiate with your colleague? At the end of the day the hire company does not want to see its clients going out of business so it does have an interest in negotiating.

    Another lateral option to consider is looking to purchase the equipment via a bank or government funded loan ($10K plus $1.8K per employee – interest free for a year) from the hire company and get the benefit of an interest free loan. However, you have the obligation to pay this off and interest after the expiry of 1 year.

    Lastly, just for the sake of completeness, I suggest your colleague checks their insurance arrangements to see if there is any cover under the general business insurance or under the hire purchase insurance contract that accompanies some HP agreements.

    Good luck to your colleague.

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    I agree with Marcus…some great options there.
    Although it’s hard to negotiate with someone who wont talk…personally I don’t think that is a fair approach in this current environment…but I would also say its not the intent of Manaaki to pick a side, just to help provide some insights that hopefully lead to a better outcome for all.
    I would explore and consider all of Marcus’ options, develop a plan and then attempt to engage again (via short email).
    If this approach doesn’t result in a more positive engagement then I would recommend your colleague emailing the efforts they have made and their proposed options…documenting this will ensure that all parties are accountable.
    If it is still a straight out ‘no’ then as a last resort I would consider delaying payment until the supplier is willing to discuss…pretty sure they will be in touch quickly if you delay your next payment.
    The goal in my mind is to find something that works for both parties ASAP as no one wins if your colleagues business closes (can they/where will the supplier re-deploy the equipment in this market?) or if your colleague decides to prioritize other financial commitments over the equipment rental (there are consequences to this).
    I’m sure it is stressful and frustrating but your colleague should try to go into this considering the suppliers side too, as they might be trying to stop their own business from going under or keep their employees/suppliers paid so try to resist the temptation to start an argument that will end up being counterproductive for all and focus on achieving an outcome where you remain a paying customer and have a positive relationship moving forward.
    Hope that helps.

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