If your company hits a week where it cannot pay every creditor in full, the worst response is to pay whoever shouts loudest. A calm, defensible order protects the business and treats creditors fairly. This is general information, not legal or insolvency advice, and a licensed insolvency practitioner should be involved if the company may be unable to pay its debts.
A sensible order of priorities
- Costs that keep you trading: payroll, critical suppliers, rent and the utilities your operation cannot run without.
- Statutory obligations: VAT, PAYE and Corporation Tax. HMRC has strong collection powers and prefers early contact.
- Secured and finance commitments: anything tied to an asset you need, and agreed loan repayments.
- Other trade creditors: negotiated where possible into a realistic timetable.
Talk before you skip
For almost every creditor, a phone call to agree a short revised plan is better than silence followed by a missed payment. Most will work with a company that engages early and proposes something credible.
That includes us. If a Credicorp Flex or Credicorp Slice repayment cannot be met in full, contact us before the due date so we can look at your hardship and forbearance options. Engaging early almost always leaves you with more room than going quiet and hoping.
See also: What is an HMRC Time to Pay arrangement, and when should we ask for one?, A director's loan to your own company: tax and legal points and Applying as a newly incorporated company.