Business debt management

Mounting debts can impact any business. Whatever the cause of your business debt problems, including debts to HMRC, developing a business debt management strategy can organise your payments and reduce the pressure of debt.

Understanding your business debt

Business debts typically range from loans and credit cards to supplier invoices and tax arrears. To effectively manage your business debt, you must first evaluate your financial situation thoroughly.

Gather all financial documents, including all records related to debts to HMRC, loan agreements, credit card statements and unpaid invoices. From this you should be able get a fairly accurate picture of the total amount you owe.

Understanding your business debt is crucial for developing an effective strategy to manage and eventually eliminate it. We can comprehensively assess your current debt situation and help you to take informed steps towards securing your business’ financial future.

How to manage business debt

Effective management of business debt is critical to maintaining your company’s financial health. The process calls for a methodically approach, which is where a licensed insolvency practitioner can provide valuable, objective advice. 

The first step we might take is to look at the interest rates and repayment terms for each debt to prioritise which debts should be paid off first. Then by getting an understanding of your cash flow, we’ll work with you to determine how much can realistically be allocated toward debt repayments.

Your options if you can’t pay creditors

Don’t wait for creditors to reach out to you with concerns about late payments or breaches in loan terms. Contacting them at the first sign of financial trouble shows responsibility and initiative. Creditors are more likely to be sympathetic and cooperative if they see you’re making serious efforts to address the issue. 

If you’re worried about having an awkward or stressful conversation with your creditors, we can support you through the process. We can also work with you to develop a realistic plan that shows them how you intend to repay and over what timeframe.

Negotiating with HMRC

Reaching out to HMRC at the earliest sign of financial trouble is crucial. Delaying can result in penalties and make the problem worse. HMRC is more likely to be receptive to negotiations if they see you’re making a genuine effort to resolve the issue rather than avoiding it.

If you’re unable to pay in full and have no previous outstanding debts to HMRC, you should have the option of a Time to Pay arrangement. This is where you agree to pay your debt in instalments over a period.

Before requesting a Time to Pay arrangement with HMRC, you should seek independent advice. We can help to assess your capacity to pay and the potential impact this arrangement might have on your financial future.

Alternatives to a Time to Pay arrangement

If a Time to Pay arrangement isn’t available in your situation, an alternative could be to enter into a Company Voluntary Arrangement (CVA). This formal agreement between a business and its creditors enables it to repay its debts over a fixed period while continuing its operations.

We can navigate your business through the intricacies of a CVA, from the initial proposal drafted for creditors to the final implementation and monitoring.

Contacting a professional is the first step towards navigating your business out of financial distress. We regularly work with businesses to put in place business debt management plans that enable them to overcome their challenges and take positive steps forward.