Business debt and cashflow pressure

Cash flow problems occur when a business does not have enough money available to meet its immediate obligations. If those problems continue and the company cannot pay its debts when they fall due, it may be insolvent. Put simply, ongoing cash flow difficulties are often one of the earliest warning signs of insolvency, which is why seeking professional advice at an early stage is so important.

Yes, you can negotiate with creditors yourself, some businesses do in the early stages of cashflow problems. However, negotiations are more challenging when debts grow or creditor pressure becomes more sustained.

Our professional advisers can help you present your case clearly, effectively negotiate with creditors to reduce the pressure on you, and ensure any agreements made are fair, realistic, and sustainable for your business.

A statutory demand is a serious legal notice and should never be ignored. In most cases, you have just 21 days (three weeks) to take action. If the demand is not dealt with, the creditor may use it as evidence that your company is unable to pay its debts and could begin winding-up proceedings.

The most important step is to seek professional advice as early as possible. The sooner we understand your position, the more options are likely to be available. Depending on the circumstances, this may involve challenging the demand, negotiating with the creditor, refinancing the business, agreeing a repayment arrangement, or considering a formal insolvency solution where appropriate.

If you receive a statutory demand, contact us immediately. Early action can often prevent the situation from escalating and help protect both the business and its directors.

If you have received a winding-up petition, you should seek advice immediately. Although the court hearing may be several weeks away, the petition can generally be advertised from seven business days after it has been served, which can lead to serious consequences such as frozen bank accounts and increased pressure from creditors.

The good news is that receiving a winding-up petition does not necessarily mean the company will be wound up. Depending on the circumstances, it may be possible to negotiate with the petitioning creditor, settle or dispute the debt, explore restructuring options, or place the company into a more appropriate insolvency process such as a Creditors’ Voluntary Liquidation (CVL), where directors typically retain greater control over the process. In some cases, the court may also be asked to adjourn the petition hearing to allow these solutions to be pursued.

The earlier advice is sought, the more options are likely to be available.