Many businesses feel that they are locked in a circle in which cash-flow problems are preventing them from paying creditors.

Meanwhile, dealing with creditors takes up so much time, and restricted credit is so disruptive to normal business functioning, that it gets harder and harder to get in the cash to improve cash flow and pay the creditors.

Creditors can put on immense pressure, sometimes to the extent of trying to close the business rather than allowing it to trade out of what may be temporary difficulties. They may threaten County Court Judgements (CCJs) or may ask Companies House for a winding-up petition. However, there are ways of managing creditors.

Contact Recovery Experts as Soon as Possible What you do depends on the type of creditor you are dealing with, and because this is a complex area it’s wise to get in touch with a firm of business recovery experts. This has two great benefits. First, they actually understand the area and have heard all the creditor pressure tactics before. Second, you’ll feel a lot better once you’ve spoken to them and know that they’re fighting your corner and giving you sound advice.

Creditors can to some extent be divided between the tax people – HMRC – and the rest. HMRC is often one of the most pressing creditors, and its powers are substantial. You need to get advice from experts who constantly deal with HMRC on behalf of clients who owe various kinds of tax. The experts understand the fine detail, know what is likely to happen next and may be able to arrange a repayment schedule or other arrangement for you.

It’s definitely the case that earlier is better when it comes to the Revenue, so don’t delay. And if you’re finding it all too stressful, go to a business recovery expert and get them to take the pressure off you. Then you can deal with helping the business recover and survive.

Pressure from Private Creditors

The private creditors can be divided into banks and finance houses, landlords (if you are renting or leasing premises) and your trade creditors or suppliers. They can apply pressure in different ways.

Organisations which have lent you money can threaten to close down the lending facility and demand immediate repayment. They may threaten to confiscate plant or other items, especially if you have provided security for the loan agreement. However, the fact that you are experiencing cash-flow problems doesn’t necessarily mean that nobody will lend to you. If your business is basically sound or has some assets, you may be able to refinance your loan – again, get in touch with a business recovery specialist, because they advise on these kinds of deals all the time, know who to go to for funding and can recommend the best loan structure for you.

Trade creditors will usually start by having their own credit controllers contact you to ask for settlement. The difficulty here is that if cash-flow problems mean that you have several creditors chasing bills, this pressure can feel overwhelming. You need to try to avoid any of these businesses initiating a “winding-up” petition, which they can do if they obtain a County Court Judgement and the debt remains unpaid. Unfortunately if one creditor does this, others can join the petition, and at this point things become very difficult.

So the key message is to avoid delay, because it will only make the pressure worse. There are lots of ways to deal with the situation, so talk to a recovery expert as soon as possible.