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If you cannot afford to pay your suppliers our advisers can offer expert guidance on your options

Licensed UK Insolvency Practitioners FREE Meeting for Company Directors

We can help with serious company debts, HMRC and creditor pressure, VAT/PAYE/Tax arrears, cashflow problems and raising finance.

I can’t afford to pay my suppliers

Reviewed: 23rd March 2015

Most businesses will suffer from cash flow problems at some point. It can be a fine balancing act between getting payments in from customers and paying your suppliers on time. Often, cash flow problems are just a short-term issue and you can carry on trading through them. Your suppliers may agree to extend their credit days, for example from 30 days to 60 days, but if you’re late paying invoices on several occasions, then their alarm bells will start ringing.

If you can’t meet your agreed payment terms with your suppliers and you’re getting final demand letters, then it’s time to take action before things get any worse. It’s better that you take action yourself rather than a supplier taking action against you. There may be some tough decisions to make, but the sooner you tackle your problems the better.

Speak to your accountant or an insolvency practitioner to establish if your business is technically insolvent and to go through your options. There are different routes that you could take depending on the amount of debt and whether you want the business to carry on or stop altogether.

If you think that your business could become profitable again once you’ve got this debt under control, then you could consider a Company Voluntary Arrangement if you own a limited company, or an Individual Voluntary Arrangement for sole traders. Under these schemes, an agreement is drawn up with your creditors giving you more time to pay. Entering into a CVA gives you protection from further pressure from your suppliers, providing you keep up with the payments.

If you don’t think that your business is worth continuing then you may consider a creditors voluntary liquidation, whereby the company stops trading and an insolvency practitioner sells the assets to raise money to pay off your creditors.

Another option is administration. In this case, an insolvency practitioner is appointed to run the company until it is either sold, restructured or liquidated. This will give you protection from your creditors, but whilst it is in administration the business will not be under your control. Seek professional advice from an insolvency practitioner to see which option is best for you.


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