Can’t pay company suppliers

What are my options if I cannot pay supplier invoices and bills?

If your company can no longer afford to keep up with the payments due to suppliers for goods and services, swift action should be taken to get to the root of the problem.

Once you begin to miss payments to suppliers, the situation can quickly spiral out of control. As your company debts increase, you run the very real risk of insolvency if a plan is not put in place to rectify the problem.

Failure to pay what you owe could also see suppliers removing the line of credit to your company, meaning you will have to bring your account up to date and then pay for any further goods up front. Depending on how serious the problem gets, suppliers may terminate your account entirely and refuse to trade with you in the future.

Depending on how key these suppliers are to your ongoing business, you may find your operations quickly grind to a halt.

How do I deal with supplier pressure when I cannot afford to pay them?

Keeping suppliers on side is key, particularly when your company is experiencing cash flow problems. Allowing invoice payment dates to pass without communication with your suppliers, is only likely to make the situation worse.

Your suppliers can take serious action against your company should you refuse to pay them the money your company owes. In the worst-case scenario, this could mean petitioning the courts to wind up your company and place it into compulsory liquidation.

That’s why clear and transparent communication is vital. You may be pleasantly surprised at how accommodating your suppliers are if you are open and honest with them. You may be able to negotiate the repayment terms on outstanding invoices, allowing you to pay the money you owe over a series of smaller instalments over a longer period of time. This could be a great solution if your supplier debts are low and your cash flow problems temporary in nature.

But what happens if your cash flow problems are so severe that you are worried about the long-term future viability of the business?

Understanding supplier debts and company insolvency

If supplier pressure and an increasingly tight cash flow position is threatening to place your company in an insolvent position, you should make it a priority to seek professional insolvency advice from a licensed insolvency practitioner.

As the director of an insolvent company, you have a number of legal roles and responsibilities which you must adhere to. One of these is prioritising the interests of creditors and shielding them for any further financial losses. By seeking the help of an insolvency practitioner at the earliest signs of insolvency, you are ensuring compliance with these legal requirements.

An insolvency practitioner will be able to talk you through the options available to you and your company when faced with supplier debts and invoices that you simply cannot afford to pay. The options may include a form of restructuring by way of administration or a Company Voluntary Arrangement; or, if the situation is past the point of rescue, they can discuss how to close the company in the most appropriate manner which is likely to involve a Creditors’ Voluntary Liquidation (CVL).

How UK Liquidators can help with supplier debt

For immediate help and advice for dealing with unpaid invoices and supplier debt, contact the team at UK Liquidators. With a nationwide team of fully licensed insolvency practitioners, we can give you the expert guidance you need during your company’s most challenging times.