Get help and advice about your debt problems

Many businesses run into financial difficulties but, however big or small the problem, there is plenty of good advice to be found. Whether you are having trouble paying suppliers, or you have received a County Court claim, there are organisations that can help you.

Government agencies, solicitors, accountants, some charitable organisations and debt counsellors are all able to offer valuable advice on dealing with debt.

This guide explains when you should consider seeking advice and where to find guidance on avoiding debt. You will also find guidance on the various sources of debt advice available to businesses in financial difficulty or facing insolvency.

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When and how to seek debt help

It is always very stressful facing financial problems as a business, but there is often help and advice available to help you tackle them before it gets too much to handle.

Before you seek advice about your financial problems, there are certain actions that you can take to minimise their impact, or even reduce your debt burden. You should:

• calculate your total debt and decide how much you can afford to repay each month
• inform your creditors as soon as possible if you are finding it difficult to pay, you may be able to renegotiate your payments, such as spreading them over longer periods or waiving interest- see the page on negotiated agreements with creditors in our guide to insolvency options for individuals.
• tackle any priority debts first – eg rent and utility bills
• assess whether you can improve your cashflow management – see our guide on cashflow management: the basics.

If you can’t improve your financial situation yourself, or if your debt problems are too much to handle, there are several debt advisory bodies who can offer advice on business debt. For more information, see the page in this guide on where to find advice on debt.

You may also decide to borrow money to help you deal with your financial problems in the short term. However, it is important to always consider the risks fully as it can be dangerous to borrow money in order to solve debt problems. It may help in the short term, but in the long term, you could end up paying more. For more information, see our guides on bank finance and non-bank finance.

You should also be careful when seeking advice or finance – for example, you should:

• Avoid illegal loan sharks – they are not licensed to lend money and often charge high rates of interest. You could find yourself under immense pressure through intimidation if you default on a repayment. To check that the lender is licensed by the Office of Fair Trading (OFT) you can search the Consumer Credit Register with the OFT.
• Check the credentials of an organisation before you contact them, and establish what kind of advice is on offer through internet or telephone research. You should also check that a lending organisation is accredited by the Financial Services Authority on the FSA website- Opens in a new window.
• Shop around for the best deal and try to seek free advice first. Some companies providing debt management programmes charge a fee and may even charge for providing initial advice.

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Where to find advice on debt

There are several sources of advice available on business debt, including:

• the Citizens Advice Bureau (CAB) – find out about the work and services of local CAB offices on the Adviceguide website- Opens in a new window
• Business Debtline – find free independent advice about business debt on the Business Debtline website- Opens in a new window
• the National Debtline find free independent advice on dealing with debt on the National Debtline website- Opens in a new window or call the National Debtline on Tel 0808 808 4000
• Advice UK – find out about organisations providing debt advice on the Advice UK website- Opens in a new window or call Advice UK on Tel 020 7469 5700
• Money Advice Scotland – find advisers on business debt in Scotland on the Money Advice Scotland website- Opens in a new window
• the Independent Advice Network for Northern Ireland – you can find out about money management on the Advice NI website- Opens in a new window, find advisers on business debt in Northern Ireland on the Advice NI website- Opens in a new window or call the Advice NI on Tel 028 9064 5919

Professional advisers

Professional advisers can also provide good financial and debt management advice. If you already use an accountant or solicitor, they may be able to help. If you do not already work with one, it may be a good idea to find an accountant or solicitor who specialises in your industry or financial problems.

For more information, see our guides on how to choose and work with an accountant and how to choose and work with a solicitor.

Banks

Your bank will probably offer financial help and advice as part of their services. But you should remember that your bank has its own position to protect and its interests may not be exactly the same as yours.

Your account manager may be able to help you look at how you are managing your finances and whether this can be improved. They may also help you work out a payment plan, or you may be able to extend your overdraft or renegotiate your account terms.

If you are not happy with the service your bank is providing, it may be time to switch. You may even be able to get a better deal elsewhere. For more information, see our guide on how to choose and manage a business bank.

Debt counsellors

Although most debt counsellors work with individuals with debt problems, some specialise in business debt management.

There are a number of charities who can offer free and impartial debt counselling. Find out about the Consumer Credit Counselling Service on the CCCS website- Opens in a new window and read advice about dealing with debt on the Credit Action website- Opens in a new window.

There are also some commercial organisations who can offer debt counselling and management advice, for a fee. For example, they may be able to help you consolidate your debts into one monthly payment. However, as with many financial services, it is always best to consider all the options before making a final decision. You should also consider a debt management company’s reputation fully before working with them.

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Where to find advice on insolvency

If your business can no longer pay your business debts, or if the value of your assets are worth less than your debts, then your business is ‘insolvent’. This can then lead to:

• bankruptcy – see our guide on bankruptcy: the basics.
• receivership – if you can’t pay your debts, your creditors can petition the court for receivership.
• administration – if you can’t pay your debts, a creditor may appoint an administrator to manage your finances in order to save you from liquidation and to pay all your creditors
• a winding up order – which will effectively cause your business to cease to exist
• an individual voluntary arrangement (IVA), which is an agreement between you and your creditors of a payment plan – see the page on the Individual Voluntary Arrangement in our guide to insolvency options for individuals
• a Debt Relief Order (DRO) – see our guide on insolvency options for individuals: Debt Relief Orders
• a Fast Track Voluntary Arrangement (FTVA) – see our guide on Fast Track Voluntary Arrangements

Only a licensed insolvency practitioner can be appointed as a liquidator, administrative receiver or administrator. You can find an insolvency practitioner with The Insolvency Service- Opens in a new window or find information about insolvency support for business on the Association of Business Recovery Professionals (R3) website- Opens in a new window.

Insolvency in Scotland is dealt with by the Accountant in Bankruptcy (AiB). Find information on insolvency in Scotland on the AiB website- Opens in a new window.

In many cases, insolvency and its effects are unavoidable. Some businesses, however, may choose to declare themselves bankrupt if debts are completely unmanageable. Either way, it is always best to know all of the options and possibilities, and so it is highly recommended that you seek professional advice.

See the page in this guide on where to find advice on debt.

For further information about the options available to you if your debt problems have become unmanageable, see our guides on insolvency: the basics and bankruptcy: the basics.

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