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Unable to pay Company Suppliers

Unable To Pay Company Suppliers

Unable to pay company suppliers. Written By John A Waller. Reviewed November 5th,2022.

If your business struggles to pay suppliers, it can be stressful for you and your company.

The result will impact profits and the ability to continue manufacturing.

So if you are worried about issues like the above, and can’t pay back your bounce back loans weighs heavy on directors. However, solutions are available to help.

If you experience late payment debtors of your company, encounter technical issues, contracts cancelled by customers or are sales depleting, including the Coronavirus? Then the unplanned impact can have a severe effect on your profitability. 

Make sure you control the situation by taking planned action with help from HBG Advisory. 

Unable to pay Company Suppliers – Are options available?

YES.

  • It is essential to seek advice from a Licensed Insolvency Practitioner.
  • Is your business viable?
  • Does it require Closing?
  • Protect your interest as a Director.
  • Protect Interest of Creditors.

HBG Advisory has highly experienced Insolvency practitioners to hold your hands and guide you through this stormy period.

Dealing with suppliers you can’t pay and advising them so

Many directors worry about not paying suppliers more than the HMRC. Suppliers can stop production and trade if supplies and stock run dry.

So be upfront with your suppliers. Many you have traded with for years. Many of them may have experienced cash flow issues themselves.

Usually, suppliers appreciate the truth about your business predicament.

Arrange an urgent meeting with your accountant and draw up a new cash flow. This will hopefully give you a clearer indication of when you may pay them. Providing you are factual on your payment dates, suppliers often appreciate your best efforts to resolve matters.

Financing and being unable to pay Companies Suppliers

Seeking commercial financing remains an option. 

We can look at and introduce you to providers who desire to help rapidly.

Formal payment settlements.

Should your company only experience a short-term issue but lack cash flow, but can return to profit? Then a Company Voluntary Arrangement (CVA) can offer a solution for you.

A CVA requires consolidating your company’s debt, so you get a monthly period of 60 months. Therefore, it removes instant demand to pay creditors and is considered affordable. Creditors usually vote to accept this (Though not always) as perceived as a better outcome than a liquidation.

Are you closing your business for good because you are unable to pay company suppliers?

Your business is beyond help. What afterwards?

A Creditors Voluntary Liquidation (CVL) will formally shut your company down while dealing legally with your company creditors.

Known also as a CVL. Assets of the Company are sold (Liquidated) by agents of the appointed liquidator. Also, the company officially ceases. 

Selling on Company (pre-pack)

Pre-pack administration remains a popular process when wishing to purchase assets from an original limited company, which is insolvent. A pre-pack administration allows trading to continue, hopefully with little impact on customers. The debt remains with the original limited company. 

Usually, the deal is carried out before the company has an administrator appointed, conducted by a reputable independent agent. The sale happens immediately; the appointment occurs.

The process ensures a seamless transfer, hopefully. They involve the previous team or even a new company. Phoenix companies exist from pre-packs, helping staff (Job Security). Hopefully, the process enables a better prospect for creditor payout.

For further reading on administration, please view ‘Administration, A guide for directors of a company‘.

Contact HBG Advisory for further help on how a pre-pack may help your business.

Should I stop trading with my Company?

If your company’s debts are greater than its assets, and cash flow can’t pay “as due creditors”. Then your company is considered insolvent. URGENT advice is required.

Therefore, cease trading immediately to avoid wrongful and fraudulent trading.

For further detailed reading, please check out ‘How to identify the symptoms of wrongful trading‘.

Failing to do so falls you foul of the Insolvency Act 1986 and Companies Act 2006.

Unable to pay Companies Suppliers and Wrongful trading

Directors of a limited company must be up to date on the day-to-day financial situation of their company. Furthermore, in insolvency, they must ensure that company shareholders remain informed. Then approach a UK Licensed Insolvency Practitioner, like HBG Advisory. They are also required to notify creditors of their position financially.

Attempts to trade while insolvent and allow the financial position to deteriorate may be considered wrongful trading.

Trading Fraudulently.

Operating fraudulent trading exposes directors to considered knowledge-based action. Not deliberately paying creditors may cause directors exposure to a prison sentence. Furthermore, selling your company assets before liquidating your company or knowingly accepting credit with no intention to repay is considered fraudulent.

Therefore

Not able to pay suppliers as and when due? The financial options exist. However, how deep is the black hole? Failing to deal with the problem still causes issues. Formal payment plans remain viable if viable. Failing which, closure by liquidation remains an option, opting to trade, knowing you have no funds to pay your companies, creditors remain fraught with danger. You risk trading your company while knowing you are insolvent, leading to wrongful trading.

How may HBG Advisory assist you and your Company?

Depending on your limited company financial position, HBG Advisory may assist you and your company with a product to operate with your business.

Assistance includes closing your company, raising additional finance or pre-packing the company as a sale to a new entity.

Available Insolvency solutions

Insolvency generally stresses all involved, so if you think your company is in insolvency with debt that you may no longer manage, contact HBG Advisory.

Assistance – Limited Company.

Is the debt manageable and your business viable? You may consider a voluntary arrangement that allows directors to remain while managing the company and repay creditors. Other methods depend on the type of debt and creditors’ willingness to work with you to minimise creditors’ losses while maintaining company viability.

The Team at HBG Advisory

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