Talking to creditors when things are difficult is daunting, but it is also one of the most effective things a director can do. Creditors — whether suppliers, lenders, or HMRC — generally prefer to agree a manageable repayment plan over pursuing enforcement action.
Prepare before you call
Before you contact any creditor, put together a clear picture of the company's position:
- What you owe in total, and to whom
- What cash you have available now
- What cash you expect to receive over the next 30, 60, and 90 days
- A realistic proposal — a revised payment date, a reduced monthly sum, or a short payment holiday
You do not need a polished document. A simple spreadsheet or even a clear set of notes is enough to hold a productive conversation.
What to say
Be direct and factual. Explain that the company has a cashflow difficulty, that you are managing it actively, and that you want to honour the debt. Propose something specific rather than asking what they want. Creditors respond better to a director who has a plan than one who is simply apologising. Confirm any agreement by email immediately after the call.
HMRC Time to Pay
HMRC has a dedicated service for businesses that cannot pay a tax bill on time, called Time to Pay. You can request a payment arrangement for PAYE, VAT, Corporation Tax, and Self Assessment. Call the HMRC Business Payment Support Service on 0300 200 3835 before your payment deadline if at all possible — it is much harder to negotiate after enforcement action has started.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: What to do when you cannot pay a supplier, Where to get free business debt advice.