How to Get Free Business Debt Advice
We are one of the UK’s foremost specialists in providing business debt advice and solutions for small businesses.
We specialise in helping directors of limited companies through challenging circumstances, always seeking to find the best possible solutions.
In this article, we’ll run through some of the common questions people ask us about business debt, as well as offer advice about where to get more support.
How do I Clear my Business Debt?
Dealing with debt problems will depend on the severity of the problems and every company has a different situation.
For some small businesses, debt problems have become severe, with an inability to pay suppliers or HMRC. We are experienced in negotiating time-to-pay arrangements. We can also advise whether you may have reached the point of insolvency in which case we can suggest the best options.
If you are still likely to be solvent, some business debt solutions may include:
- A careful, strategic inventory of your debts – sorting by interest rates and the amount due monthly. This process will give you a complete picture and allow you to prioritise which to pay first.
- Increasing sales – Increase cash flow via intelligent marketing, raising prices, and incentivising existing customers to buy more.
- Reducing Costs – Do You Need to make some redundancies? Can you sell off equipment or downsize your office space?
- Debt Refinancing – Many business owners find themselves crippled by debt repayments which could be substantially lowered via strategic refinancing. Debt consolidation is a common strategy reducing the number of creditors in favour of a single monthly repayment.
- Improved Payment Terms or Invoice Financing – Requesting shorter payment terms or using an invoice factoring facility are both ways to improve the working capital cycle and improve your debt ratio.
Of course, insolvency is the option where these fail and it’s a debt solution in the sense it will clear your debts and close the company.
Where to Get Free Business Debt Advice in the UK?
Several organisations in the UK offer business debt advice. Some options include:
- Citizens Advice: This organisation offers free and impartial advice on various topics, including debt and financial problems. You can visit their website or find your local Citizens Advice bureau to speak with an adviser.
- The Money Advice Service: This government-funded organisation provides free and impartial advice on financial matters, including debt and financial difficulties. You can visit their website or call their helpline to speak with an adviser.
- Business Debtline: This charity provides free, confidential, and impartial advice to small businesses and self-employed people in the UK struggling with debt. You can contact them by phone or through their website.
- Your bank or lender: If you are having trouble making payments on a business loan or other debt, you should contact your lender as soon as possible. They can work with you to find a solution, such as restructuring your debt or offering a repayment plan.
It is essential to act quickly if you are having financial difficulties and to seek advice from a qualified professional.
Business Debt Advice from Company Debt
Our longstanding experience and team of specialists can free advice on the following options
- Apply for Finance – If it’s an option for you, finance may be the best way to pay creditors off and pay back what you owe over a measured period.
- Ask HMRC for a Time to Pay Agreement – If the debt is to HMRC, they may be open to a time to pay agreement, which is a monthly payment instalment plan.
- Company Voluntary Arrangement – A CVA is a formal agreement to repay business creditors which is negotiated by an insolvency practitioner. Creditors must vote to accept the proposed terms.
- Consider a business rescue or restructuring process such as administration. Going into administration offers a moratorium against creditor action which an administrator temporarily takes over the running of the company
- Consider Voluntary Liquidation – At a certain point, debts may become intolerable and force you into liquidation. Choose this voluntarily before an angry creditor forces it with a Winding up Petition is the better course of action, retaining more control for company directors.
Could You Be Personally Liable for Business Debts?
While the limited company structure is designed to prevent personal liability, there are some exceptions where a director may be considered personally liable.
Some examples of this are as follows:
- Where a director has signed a personal guarantee document against business finances
- If a director has engaged in wrongful trading, i.e. knowingly continued trading after the point of insolvency.
- if you’ve tried to sell company assets at a falsely low price.
- if you have an overdrawn directors loan.
- If you’re engaged in fraudulent or criminal activity
Which Business Debts Should a Limited Company Pay First?
Of course, paying everyone is important, but it’s possible to classify some business debts as more urgent than others based on their likelihood to threaten you with a statutory demand.
- National Insurance
- Corporation Tax
- Business rent
- Business rates
- Debts to Your Suppliers
- Bills to Accountant
- Credit Cards
- Payday loans
- Non-essential business suppliers
Advice on HMRC Business Debt
The fact that HMRC is the single largest issuer of winding up petitions, the ultimate threat any limited company can face, tells you they mean business when it comes to collecting what is owed them.
One other factor reinforces this, further separating HMRC from other creditors. This is the fact that winding up a company which owes them money is not always done on the basis of recouping money. HMRC will sometimes wind up companies purely on the basis of making an example, even if it costs them money.
If you owe HMRC money, simply reach out to one of our experts to find our what are your options at this point.
Business Debt Advice FAQs
You should take professional advice immediately, from a licensed insolvency practitioner. Keep in communication with your creditors, and ensure you understand your statutory requirements when it comes to creditor responsibility.
What is the consequence of failing to pay off business debt?
Creditors have a number of legal options available to them to recoup their debt including – as the most serious action they can take – issuing a winding-up petition which will trigger a court hearing if the debt remains unpaid. That could result in the compulsory liquidation of your company.