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Company debt management - is your business struggling with business debt?

It’s all too easy for business debt to occur.  Late settlement of customer invoices, coupled with seemingly minor difficulties such temporary supply issues, can compound to create a temporary cash flow problems meaning that supplier invoices may go unpaid.  Before too long, the situation has quickly escalated into debt, which can threaten the longevity of your business.  

So, what can be done?  We’ve pulled together some top tips below that you may not have considered.

1.    It may be that you have been too busy working in the business, rather than on it.   If you can, take a step back and look at the bigger picture.  If you’re having staffing pain points, can you redeploy roles?
2.    Don’t let your invoices languish…make sure you bill your customers quickly.  Cloud accounting software can help you with this
3.    Are you being too generous with your credit terms?  If you know your customers leave it until the 11th hour to pay you, renegotiate your terms with them if you can
4.    Don’t make it difficult for your customers to pay your bills – ensure a variety of means by which to pay, including offering online facilities, maybe a payment portal on your company website
5.    Secure a cash boost.  If you’re waiting on a long awaited contract to crystalise, or a large invoice to be settled, there are short term finance options open to you other than from your own bank, who may be reluctant to help in this situation.  For example, invoice financing, or lending against your assets could be a good alternative if you’re rushing towards cash book insolvency
6.    At this point in time, keep it simple and don’t over diversify your business offering.  Instead, focus on your most profitable and successful products and services.  Once you’re over the bump in the road, you can switch your focus back to growing your business.

If all of the above fails then a formal administration process may be the way forward.  This will protect the business from its creditors whilst a scheme of repayment or restructuring, or realizing assets, can take place to clear business debt.  
Above all else, act quickly.  Don’t be tempted to bury your head in the sand and hope the issues will go away.  Try to remain calm; don’t let panic cloud your judgement and reason.


Contact the team below for further advice