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On The Brink: Bob Swartz Rescues
Businesses from Edge of Financial Disaster
By Ashley Blaker
San Antonio Business Journal
Published: April 16, 1995
When Commercial Glazing Co. owner Jim Scott found himself $40,000 in debt to his suppliers last summer, local debt workout specialist Bob Swartz helped him negotiate the deficit down to about $8,000 and freed him to make the money from his ongoing operation to repay the debt. "Everything was referred to him. I didn't have to talk to the people and give them sickly excuses. He worked it out for less than half of what we owed in just a couple of months," said Scott.
Scott, like other small-business owners, has learned that you can't pay your bills if dealing with your creditors is keeping you from working. Spending more time dealing with debt collectors or coaxing suppliers to give you one more extension leaves you little time to put out a product. The pressure can be incredible.
The first step is acknowledging the problem. But admitting that your business is on the brink of disaster is difficult. "You can talk to a man about his sex life more easily than you can talk to him about his debts. That's foolishness. We can all benefit from others' ideas ... even in our sex lives," said Swartz. Swartz has been helping small-business owners face up to their debts and work toward a resolution with creditors since 1987. Swartz is the president of Financial Technologies, a local finance and credit consulting firm. "My goal is to bring my clients to a debt-free status so they can get on with it," he said.
Swartz now consults Scott in his ongoing business to make sure that the debt problem doesn't reoccur. As part of that consulting, Swartz helps Scott pursue debts owed to his business, the source of the cash shortage that put him into debt last year, said Scott. Swartz said there is a retainer necessary to get started and fees are based upon performance. For that fee, he will make himself available to his clients for a variety of management consultation and debt negotiation services.
The first thing that Swartz does is to take the pressure off company personnel by setting himself up as the only contact for creditors. That frees the business people to work on the business that will make the money to settle the debts. Swartz then analyzes the company, its debt, income and assets, and works with the owner on a plan of action.
"We try not to work out payment plans. Payment plans are what got them in trouble. We work out settlements," Swartz said.
Since they often don't have many assets, the value of a small business -- and its ability to pay its debts -- is in its continued operation. Swartz sets out to find out how much money can be made available to pay outstanding debts while allowing for continued operation of the business. He begins debt negotiations from there. "I base my offers on my clients' ability to pay. I won't over commit my clients," said Swartz. In some cases, Financial Technologies has been able to get manufacturers to cooperate and supply raw materials for projects, allowing the debtor to pay off those materials and a portion of their past due debt.
Through his association with factoring companies, which pay cash for invoices at a discount to their value, Swartz has been able to help some clients overcome severe short-term cash shortages. "Factoring depends on your customer's credit, not yours," so it can be an option for even the most financially troubled businesses.
On several occasions since he started in business, Swartz has come up against situations in which creditors refused to negotiate or other factors made bankruptcy the best alternative.
Such was the case with Robert Kjar, president of Universal Computing Corporation of San Antonio. In developing his computer software firm catering to the veterinary market, Kjar accumulated about $350,000 in outstanding debts. Through negotiations with creditors, Swartz was able to negotiate $150,000 of that debt down to about $70,000 and pay it off.
But the remaining debt was owed to banks that refused to negotiate. With Swartz's help, Kjar filed for Chapter 11 reorganization bankruptcy. Kjar is now working with Swartz to come out of bankruptcy debt-free. He is far from being unhappy with Swartz for not being able to help him solve his problems outside of bankruptcy. Instead, Kjar has high praise for Swartz's methods.
Previously, Kjar had dealt with three other management consultants before finding Swartz. He found them to be "essentially ineffective" because they were not oriented toward reducing debt. "Bob fills a void in our company in terms of expertise and ability that we don't have and most small businesses don't have," said Kjar.
