Business debt is common, but ignoring it can put your company at risk. Chris Worden explains how to face debt head-on, prioritise repayments, and communicate with creditors to regain control.
- Debt itself rarely destroys companies—inaction does
- List and measure all debts accurately
- Prioritise HMRC, staff, and critical suppliers
- Communicate early with creditors
- Negotiate structured repayment plans
- Improve cash flow and cut unnecessary costs
- Seek professional advice early
Why Debt Alone Isn’t the Problem
Most UK businesses carry some debt. The real danger comes from ignoring the issue, delaying decisions, or hoping things will improve without action. Chris Worden highlights that silence and lack of planning are what push directors into insolvency and personal liability.
Understand Your Debt Position
You can’t manage what you haven’t measured. List all debts, including:
- HMRC arrears (VAT, PAYE, corporation tax)
- Bounce Back Loans, CBILS, recovery loans
- Overdrafts, supplier balances, rent, utilities
- Personal guarantees and director’s loan accounts
Use up-to-date bookkeeping or accounting software to get a clear picture.
Prioritise Repayments the Right Way
Don’t just pay the loudest creditor. Instead, focus on:
- HMRC (taxes escalate quickly)
- Staff wages and morale
- Secured lenders (banks)
- Critical suppliers
Negotiate structured repayment plans with other creditors.
Communicate Early and Honestly
Contact creditors before they chase you. Be honest about your situation and provide realistic repayment proposals. Tell them you’re taking professional advice—especially with HMRC.
Negotiating with HMRC
HMRC is often the most powerful creditor. Set up a Time to Pay arrangement if you’re behind on tax, but ensure all returns are filed and cash flows are prepared. Never ignore HMRC letters and always cooperate with compliance checks.
Improving Cash Flow
- Increase cash in: chase debtors, shorten payment terms, get deposits
- Reduce cash out: cut unused subscriptions, renegotiate supplier terms, reduce director drawings
When the Business Isn’t Viable
If your business can’t recover, consider voluntary liquidation or administration. These processes can write off unsecured debt and give you a fresh start. Remember, the company is separate from you as a director.
Key Takeaways
- Face debt early—don’t delay
- Get accurate numbers and prioritise repayments
- Communicate and negotiate with creditors
- Seek advice from professionals like Chris Worden
- Consider formal insolvency options if needed
Frequently Asked Questions
- What’s the biggest mistake directors make with business debt?
- Delaying action and ignoring the problem, rather than facing it and seeking help early.
- How should I prioritise which debts to pay first?
- Prioritise HMRC, staff wages, secured lenders, and critical suppliers before others.
- Can I negotiate with HMRC if I’m behind on tax?
- Yes, you can set up a Time to Pay arrangement if you communicate early and provide accurate information.
- What if my business can’t recover from its debts?
- You may need to consider liquidation or administration to close the company and write off unsecured debts.
- When should I seek professional advice?
- As soon as you feel overwhelmed or unable to manage repayments—early advice gives you more options.
Need tailored advice? Contact our team today for a confidential, no-obligation chat.
