When cash will not cover everything, the instinct is to pay whoever shouts loudest. A calmer, priority-based approach protects the company far better.
Priority debts come first
Some obligations carry the sharpest consequences if left: wages (without staff there is no business), rent or mortgage on premises you trade from, essential utilities, and HMRC, which has strong enforcement powers. These generally sit at the top.
Then the suppliers you cannot trade without
Next come the key suppliers whose goods or services keep you earning. Losing them can stop the business, so a part-payment or agreed plan with them often protects more value than clearing a less critical debt in full.
Talk to every creditor, including us
A loan payment you cannot make in full is not something to hide from — a partial payment plus an arrangement keeps arrears from building. Interest on our loan runs at 0.25% per day and is capped at 100% of principal, so the cost of a short delay is known and limited.
For free help ranking your debts, Business Debtline gives free, confidential debt advice to small businesses and the self-employed at businessdebtline.org or on 0800 197 6026.
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: How to prioritise which bills to pay first, What not to do when your company cannot pay, Can I make a partial payment if I cannot pay in full?.