Updated: 8th January 2020
Being harassed by suppliers demanding money can be a very stressful time for business owners. If your suppliers have already extended their credit days and you still haven’t paid them what you owe, their alarm bells will be ringing. It’s likely they’ll already be considering taking things to the next stage to try and recover their money. This may be through legal letters, instructing a bailiff or applying for a winding-up petition. All of this can put even more pressure on you. You may be avoiding calls and ignoring emails from your suppliers, but unfortunately the problem won’t go away. It’s a difficult situation as you need your supplier in order to trade, but if you don’t pay them they won’t supply you with any more goods and you can no longer trade. There are a number of options available to you depending on the nature of your cash flow problems and the amount of debt your company owes, but it’s important to face up to the situation and deal with it quickly.
Firstly, you could try negotiating with your supplier. If this is just a short-term cash flow issue that can be resolved once you receive payment for some work you’ve done, try explaining this. Could you both come to an arrangement to pay what you owe over a longer period of time or once a particular customer has paid you?
If this isn’t simply a short-term issue or negotiation isn’t successful, there may be other options available to you, but you’ll need to act swiftly. It’s much better that you take action yourself and retain some control over the situation, rather than having action taken against you when things can quickly become out of your control. If your business is viable and you believe it can be turned around once you’ve got your cash flow problems under control, then you could consider entering into Company Voluntary Arrangement (CVA) if you own a limited company, or an Individual Voluntary Arrangement (IVA) if you’re a sole trader. Under a CVA or IVA, your creditors agree to accept a proportion of the money that they’re owed and a formal agreement is drawn up, giving you more time to pay. Entering into a CVA or IVA allows you to carry on trading and gives you protection from further pressure from your creditors, as long as you keep up with the payments.
If you don’t think your business is worth continuing then you may consider a creditors voluntary liquidation, whereby your company would cease trading and an insolvency practitioner would sell the company assets to raise money to pay off your creditors, including your suppliers. You should seek expert advice from an insolvency practitioner to go through all the options available and see which one is right for you.
5th August 2020
The British Chambers of Commerce (BCC) has called on the chancellor of the exchequer Rishi Sunak to change his approach to providing support to businesses across the UK economy.Read More
5th August 2020
A growing number of companies have been announcing their intention to make significant cuts to their workforces as the coronavirus crisis continues and the UK economy struggles to rebound.Read More