Commercial Debt Management

If your company starts to suffer cash flow problems, one of the first difficulties you may encounter is fulfilling the payments towards all aspects of your commercial debt — whether that may be your company credit card, bank loans, credit accounts with vendors in your supply chain, or other creditors.

Regardless of the size and scale of your business, problems repaying your company debts should never be ignored.

Business debt advisory services exist to help companies experiencing such difficulties, and can provide not only informed and impartial advice, but help develop a debt management plan to structure your repayments to creditors.

Taking the first step of talking to an experienced adviser could help steer your company back towards solvency and stability.

The key points to managing your commercial debts

At the heart of commercial debt management lies a comprehensive and realistic examination of your company’s financial position. By looking at your business’s cash flow, you can reach a true understanding of the company’s potential to repay its debts.

Armed with this information and by providing a commercial debt calculator, your adviser will work with you towards developing a debt management plan that is within your company’s means to repay, and acceptable to your creditors.

Restructuring your debt payments in this way can help to directly improve your cash flow — the importance of this cannot be understated, and it may be the turnaround you need to allow your business to recover.

Allowing a specialist business debt advice service to deal with your debt management plan usually means that they will also act as the point of contact for your creditors and any collections agencies tasked with commercial debts recovery.

This helps free up your company resources to concentrate on the day-to-day running of your business. A good debt management adviser will also make it a priority to maintain a positive dialogue and relationship with crucial suppliers and vendors. 

Working to a debt management plan, and other considerations

Much like a personal debt plan that may be overseen by a consumer counselling service or Citizens Advice Bureau, a debt management plan for your business requires certain obligations and commitments. Once you have agreed to an amount and structure for your debt repayments, payments must be made in full, and on time. Your company’s financial position should be regularly reviewed.

An adviser will also make clear if the business should cease trading — it is illegal under UK law for a company that is legally insolvent to continue trading. You must also remember that recent government legislation allows creditors to claim both compensation payments up to £100, and statutory commercial debt interest (currently 8.5%), under the Late Payment of Commercial Debts (Interest) Act 1998.
It’s important not to bury your head in the sand — taking professional advice to help deal with your commercial debt may just help set your business on the road to recovery.

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Latest News

• Late Payment of Commercial Debt: Avoiding Financial Crisis
  
  

  Late Payment of Commercial Debt: How to Avoid It Recent figures show an increasing number of UK companies getting into the bad habit of late payment of commercial debt, with most of them paying debts almost a month after the agreed payment schedule in 2011. The worst identified culprits ...

  
  Posted on 16 Feb 2012
  In Uncategorised | 0 comments