Updated: 3rd March 2020
Being unable to pay your business partner in any context is a difficult state of affairs, and one that can seriously undermine the effectiveness and longevity of your business operation.
There are ways to move forward when your partnership is facing financial hardship, however, so what can you do to ease the situation and is there any positive action you can take to solve it?
If your partnership is founded on a written partnership agreement it may state how a situation like this is to be resolved. The aim of writing a partnership agreement when the business is first formed is to formally lay out the rights and responsibilities of each partner in various scenarios.
This may include what happens in ‘non-standard’ situations such as severe financial difficulty or potential breakdown of the partnership, and its contents can help to guide you towards a satisfactory conclusion.
When you’re struggling to pay any form of debt or creditor, it’s important to seek independent professional advice. Licensed insolvency practitioners (IPs) will assess your financial position, clearly explain all the options, and guide you towards the most appropriate one for your circumstances.
Securing alternative finance is just one potential solution that could relieve the financial pressure on your business, and provide the additional working capital you need in this situation.
You may be eligible for invoice finance if you routinely offer credit facilities to your customers, for example and in this case borrowing is based on the value of your sales ledger. You can also pass control of collecting your debts to the lender, which would allow you to focus on generating more money.
Restructuring in insolvency
Depending on the type of partnership, if it has entered insolvency formal insolvency procedures such as a Partnership Voluntary Arrangement (PVA) or Partnership Administration Order (PAO) may also be suitable.
Both processes offer the opportunity to restructure debts, and could create the ‘breathing space’ you need to regain control of your partnership’s finances. If you would like to know more about your options when you can’t pay your business partner, Real Business Rescue can help.
We’re insolvency specialists and offer dependable unbiased advice to businesses in all industries. Call one of our expert team to arrange a free same-day consultation – we operate from a network of offices throughout the UK.
4th March 2021
Chancellor Rishi Sunak has announced that the furlough scheme for employers and the business rates holiday for commercial property occupants in England are both to be extended while the Covid-19 crisiRead More
3rd March 2021
Last March, unprecedented times called for unprecedented measures, with the government announcing a raft of financial support packages to help both businesses and individuals as the Covid-19 pandemicRead More