Advice Articles

How to Deal With Creditor Pressure

Advice Articles

As a director of a company, creditor pressure is among many challenges that you may face, but how you deal with it makes a big difference to the future of your company.

It goes without saying that ignoring creditor pressure is not recommended, as you could find yourself on the wrong side of a Statutory Demand or a Winding Up Petition.

Equally, getting frustrated with someone you owe money to doesn’t give them or your staff confidence that you have the situation under control.

The best course of action is to give it your full attention and take prompt action to stop it from putting your business at further risks. Creditor pressure could be a sign of insolvency, and as a company director, you have a legal duty to act timely and responsibly.

Is your company under creditor pressure?

Creditor pressure escalates when you can’t pay on time or, when you are repeatedly late with payments. It can be the result of losing a key client or a large contract, or having a company fail on you that owes you money.

Your creditors may start to contact your company more frequently and chase for payments, or they may hire a debt collection agency to help recover debts.

Often, creditor pressure highlights another problem in the business that needs prompt attention. For example, poor debt recovery; temporary cash flow problems; disputes over invoices; or, in more severe circumstances, a sign of insolvency.

There aren’t many other reasons why you would find yourself under pressure from creditors. If it's not immediately clear to you, then make sure you consult a specialist who can offer advice and help you buy time to negotiate options.

In any case, creditor pressure is your call to action.

What should I do?

Consult an insolvency expert immediately and keep your creditors in the loop.

It may be just one or multiple creditors that you are having trouble with, but it is very important that you maintain open communications with them and act quickly to protect your company.

While each company is different, there are many viable options to keep the business operating under these circumstances. These include entering into a Company Voluntary Agreement which allows your company to repay debts over two to five years typically, or taking a loan to raise funds or improve short-term cash flow.

Our insolvency experts can work with you and your creditors to put together a workable proposal that will keep your creditors informed and take the pressure off you.

Find out more about Creditor Pressure

Here are a few helpful links if you want to find out more about creditor pressure:

Has a creditor sent a statutory demand?

What happens when your company is issued with a winding up petition?

What are the options when a company is insolvent?

Take control and speak to us today to find out how we can help.

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