Whatever type of business you run, it’s likely that you buy in goods and services from suppliers in order for you to supply your own customers. Therefore any difficulty you have in paying these suppliers – who might then place you under creditor pressure – is a very real threat to your own business and its ability to continue trading.
There are a number of legal remedies available to your suppliers if they can’t collect the debt from you, which include:
In-house debt recovery
Most suppliers will start by chasing your debt “in-house”. You may receive numerous calls and emails demanding payment. If cash flow problems mean you have more than one creditor chasing you in this way, the stress of the situation can become difficult to deal with.
Debt collection agencies
Some suppliers will use debt collection agencies or even sell the debt to a collection agency, at which point the calls and emails can escalate further and place more pressure on you.
Your creditors may commence legal proceedings, such as statutory demands or applications for County Court Judgements, also known as CCJs. CCJs are a matter for public record and once obtained, will affect the credit rating of your business.
Winding up petition
A creditor who has obtained a CCJ against your business can (if unpaid) petition the court to wind up your company. A winding up petition has far reaching consequences for a business, including an advertisement in the London Gazette, the eventual freezing of all bank accounts while the petition is heard by the court, and restrictions on dealing with the assets of the company.
Multiple creditors and winding up petitions
If any of your other business creditors become aware of a winding up petition, they can “join in” or support the petition by adding their own debt. This can make the situation more challenging to resolve.
If you are struggling to pay trade creditors and/or suppliers and are facing creditor pressure, the consequences can be serious if you don’t take appropriate action. Contact us on 0333 222 8065 or email firstname.lastname@example.org for an initial free of charge discussion.