Can’t pay company’s bills and overheads

What should I do if I cannot keep up with company bills?

Not being able to pay the bills of your company – whether this is in the form of your commercial lease or rent, utilities, suppliers, or other overheads associated with running your company – is a clear indication that the business is experiencing cash flow problems.

While some cash flow worries are short-term and temporary in nature, long-term cash flow concerns have the ability to send a previously successful company into a place of insolvency. This is why it is important to take swift action as soon as you become aware your company is going to be unable to keep up with its bills and other operating costs.  

What options does my company have when unable to pay its bills?

The good news is that you do have a number of options when faced with the situation of your company being unable to pay its bills.

The first step is to assess the situation so that you can better understand the extent of the problem as well as the root cause. Perhaps your cash flow issues are down to a client paying late, maybe operating costs have spiralled out of control, or could it be that the marketplace has changed and your product or service is no longer in demand or affordable to your key customers.

Once you know the cause of not being able to pay the bills, you can then consider whether the business is viable over the medium- and long-term.

If you believe your problems in keeping on top of the company’s bills are temporary, you can explore your options – both formal and informal -  for rescue and recovery with a licensed insolvency practitioner. This could involve implementing cost cutting measures, formal or informal negotiations with creditors, or obtaining additional funding for your company. 

Alternatively, an insolvency practitioner can also talk you through company closure options if it is likely that your cash flow issues are going to be long-term.

What are the next steps for dealing with bills my company cannot afford to pay?

The first step is to communicate with your creditors (those whose bills you cannot pay). Let them know about the cash flow difficulties you are experiencing and your plans to address them. If you know you will be in a position to bring your bills up to date in the near future, you may be able to enter into negotiations for more time to pay your company’s bills.

In instances where you believe bills will go unpaid for a long period of time, you will need to seek the advice of a licensed insolvency practitioner and work alongside them to plan a route forward for your company. An insolvency practitioner can provide expert guidance on your options, including a Company Voluntary Arrangement (CVA), administration, or liquidation. 

• Administration:

Company administration aims to save viable elements of the business allowing trade to continue. This could mean closing down non-performing areas of a business, refinancing borrowing, or even a sale to a connected or unconnected third party.

• Company Voluntary Arrangement (CVA):

Company Voluntary Arrangements function as a formal repayment plan, typically lasting 3-5 years. During this time, the indebted company will make an agreed monthly contribution towards its debts, and this will be divided between creditors by the appointed insolvency practitioner.

• Creditors' Voluntary Liquidation (CVL):

If the company is insolvent and cannot be rescued, Creditors’ Voluntary Liquidation (CVL) allows for a director to voluntarily close their company and have its affairs wound up. Assets of the company will be sold to repay creditors as far as possible with any remaining debt being written off (unless personally guaranteed). The company will then cease to exist as a legal entity.  

How UK Liquidators can help with mounting company bills and debt.

Contact the licensed insolvency practitioners at UK Liquidators for the professional help you need when navigating the challenges of not being able to pay company bills. Our team can provide immediate advice and guidance.