Dealing with business debt

Our guest blogger is Nicola Connop, from Business Debtline, who recently contributed to our Solutions Magazine, the exclusive magazine for our SageCover members. It’s full of  business advice as well as technical tips for Sage software. SageCover customers can log in to see your Solutions magazine now. If you’re not a member why not find out more about about our software support and business advice service SageCover?

The economy is in yet another challenging year, testing the strength of even the most robust of businesses. But what should you do if your business is struggling with debt? Nicola Connop, team manager at Business Debtline, offers her advice…


The first step to take is to complete a thorough budget sheet to identify any surplus income that can be used to ease how much money is owed.Solutions Spring 2012

Business debts should also be split into two categories: priority and non-priority. Priority debts are where non-payment can lead to the loss of services, assets and essential goods. For example, non-payment of fuel supply can lead to disconnection, which could make it very difficult to continue trading.

Non-priority debts are those that may initially affect a credit reference file, such as credit cards and unsecured loans, and can lead to debt collection agencies and possible court action.

Early action

The earlier action is taken, the more options there are for dealing with debt and getting things back on the right track. It can seriously harm a business and an individual to knowingly take on any liabilities that cannot be satisfied. That said, it’s never too late to make a difference, and no matter how bad the situation is, there will be options available.


When it comes to managing debt, the options available depend on the particular circumstances and whether the business operates as a sole trader, a limited company or a partnership.

The routes firms can take include informal negotiation, where they deal directly with creditors to agree a way of paying debts off on an instalment basis, with priority creditors dealt with first. A sole trader may be personally liable for debt if it is all their own, and as an individual they may wish to negotiate directly with creditors or consider a debt management plan, where a third party negotiates with creditors to agree a repayment plan.

A form of insolvency that may be used is a Company Voluntary Agreement (CVA), which offers creditors a percentage of the debt owed, while administration is a process that appoints an insolvency practitioner to try and rescue the company as a going concern.

Advice and support

Dealing with debt can be a highly technical process, and that’s why people should always get some free advice before making any big decisions. Business Debtline is an independent charity providing free telephone-based advice. Its advisers can help callers complete budget sheets, provide advice on rights and responsibilities and talk through how to get a business back into financial health. Just visit or call 0800 197 6026 (opening hours Monday to Friday 9am to 5.30pm).

Nicola Connop, Business Debtline