Borrowing can fund growth, smooth seasonality and bridge large orders. Problems start when visibility slips, costs jump or deadlines are missed. The goal is simple: know your obligations, keep headroom and act early to keep on top of your business debt management.
Frequently asked questions about business debt management:
- What’s the best order to pay creditors?
Prioritise by legal and operational impact. In most cases, deal with HMRC and secured lenders first, then energy and critical suppliers, then other trade creditors. Put realistic schedules in writing and stick to them.
- Can I charge interest on late-paying customers?
Yes. Unless your contract sets a different rate, UK law allows statutory interest at 8% above Bank Rate on late B2B invoices, plus fixed recovery costs.
- What finance options are available now?
Overdrafts and revolving lines suit seasonal swings; term loans fund defined investments; asset-based lending can unlock cash against receivables, stock or plant. The Growth Guarantee Scheme is currently expected to run until April 2030 via accredited lenders, subject to eligibility and pricing.
- How costly is it to fall behind with HMRC?
From April 2025, late payment interest is charged at Bank Rate plus 4%. That’s usually higher than secured borrowing, so tax debts can become expensive surprisingly quickly. If you know you’re going to struggle to pay, it’s better to talk to HMRC as early as possible. A Time to Pay arrangement won’t reduce the interest charged, but it can stop penalties escalating and help you spread payments in a way that’s manageable for your cashflow.
- What if the business may no longer be viable?
Stop taking on new credit, seek regulated advice immediately and consider formal options such as a moratorium, CVA, restructuring plan or administration. Document decisions and act to minimise losses to creditors.
Looking ahead:
If you anticipate difficulty meeting tax or loan payments, contact us before any deadline passes. More options remain open when action is early, filings are up to date and proposals are realistic. If your forecast suggests that debts cannot be met as they are due, seek advice immediately. Directors’ duties sharpen near insolvency and timely decisions protect both the business and its stakeholders.
Get in touch with the Lambert Chapman team if there is anything we can help you with.
Download our free business guide:
This guide outlines practical steps for you to follow, including how to build a 12-week cash flow view, set a rational payment order, handle late payers, and engage with lenders and HMRC before issues escalate. It also outlines short-term cash actions, when to consider formal options and the habits that reduce reliance on expensive borrowing. Use it as a checklist, review monthly and adjust to your model.
Disclaimer
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.