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Excessive Overheads and Payroll Expenses?

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.

3 Ways to Save Your Company From Excessive Overhead and Payroll Expenses

Sometimes the cost of operating a business is more burdening than simply debt repayment obligations and other factors that commonly lead to the dissolution of struggling companies. When you're spending too much money on employee payroll, supplier contracts, inventory, equipment, utility bills, rent, etc. it can be difficult to find the funds needed to keep your credit score acceptable and keep creditors from wanting to put you out of business. So what options do you have to reduce payroll and overhead expenditure?

  • Terminate Any Unessential Employee/Supplier Contracts
  • Utilise a CVA to Eliminate Any Unwanted Employee and Supplier Contracts
  • Enter Into a Company Administration Procedure

1. Terminate Any Unessential Employee/Supplier Contracts

If you have long-term contracts or working relations with employees or suppliers and they're not essential to the continuity of the business then consider letting go those employees and holding off on any unnecessary inventory purchases. Unfortunately, independently terminating a binding contract is not always possible as you could be brought to Court over breach of contract, which is why one of the two options below may need to be considered:

2. Utilise a CVA to Eliminate Any Unwanted Employee and Supplier Contracts

A company voluntary arrangement (CVA) is a formal agreement between your company and its creditors and contributories (i.e. - employees, suppliers, etc.) which not only allows for the negotiation of repayment terms but also provides the opportunity to terminate contracts in a manner that may otherwise be considered breach of contract. 

3. Enter Into a Company Administration Procedure

Company administration is a formal insolvency procedure in which you would contact an insolvency practitioner and they would apply for an administration order for your company. If the Court grants this order your creditors would not be able to take any legal actions against your company while the order is in effect. The administrator would be acting in the capacity of an interim CEO, with complete control over company affairs. However, as IPs they also have the authority to formulate and propose a CVA during the administration in order to eliminate stubborn employee/supplier contracts.  

With overhead and payroll expenses rising, getting out of debt can seem like an impractical ambition, especially when you are stuck in contracts. However, UK insolvency law offers business owners the opportunity to rescue their business from debt issues using a number of formal procedures. Feel free to email us with your questions or call us on 0800 644 6080 for free advice.  


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