Small Business Debt Worry

A question about : Small Business Debt Worry

I own a small shop in a small market town and have always paid my suppliers pretty much on time and rarely more than a few days late. However, following very difficult Summer 2014 and Autumn/Winter 2014 seasons in which takings were severely down on previous seasons, my business has had a major cash flow problem! Due to this I have been unable to pay the correct amount owed to a particular supplier. I have been in regular contact with them via telephone and email, and assured them that the outstanding invoices will be paid in full, albeit, several months late. Although I have paid them almost Ј4000 over the last 6 months, I still owe them Ј2700.
The suppliers themselves have not been very understanding of our situation and have now passed our account on to a debt recovery company. I am now receiving letters from them stating that if they do not receive the full amount within the next 7 days I will be summoned to court.
I also owe two smaller amounts to other suppliers who have been very patient and have accepted several smaller payments.
I am very worried about the possibilty of being taken to court as I do not presently have the funds to pay the outstanding Ј2700, and would be very grateful of any advice which could prevent that and assist me getting out of this current mess.
Yours gratefully
kc

Best answers:

• These kind of letters are sent out by the thousand and are basically computer generated threatograms designed to frighten you into paying up, although court action is possible, it's usually the last resort
  Also the DCA is just acting for the creiditor, so can't take any action against you unless all rights to the debt have been assigned to them, you would of recieved a letter informing you of this, if it were the case.
  Can you not come to some kind of payment arrangement with them ?
  That's the usual course of action, pay it back over time, at a rate you can afford, simple solution.
• Sorry to hear of your business worries, it must be a very stressful time for you. I have no experience of these, but I think National Debtline have a small business advice group which might be able to advise you.
  Remember, never ignore any paperwork from these people, if you are not sure what it means, call them up and ask, them you'll know wether it's a threat or an actual action. Most debt collections are OK if you keep in touch and agree a sensible plan and stick to it.
• Hi
  As Sazzie says, we have a sister-organisation called Business Debtline who will be able to go through advice with you.
  You can call them on 0800 197 6026.
  www.businessdebtline.org
  James
  @natdebtline
• Hi Kc
  I sympathise. I also have a small business and know the exact circumstances you mention.
  In my own case I have ended up using personal credit to clear business debts which was a last resort as my business bank refused to help. The climate for SMEs in this country isn't great.
  I have only survived by talking sometimes daily to people I owe to and being brutally honest about what I can and can't afford.
  If it's a choice of paying staff and paying suppliers I have taken the view staff come first.
  Sorry to ramble. I'm guessing you have already tried borrowing against the business?
  I don't know your turnover but also not to be bleak but it depends what that debt represents in turns of months of trading to clear. If it is the case it's several months income is it worth fighting on?
  Anyway. I'm sorry I don't have more advice for you but just to say I really feel for you.
  Bob
• Thanks everyone for the advise and the sympathy. I realise a lot of small business's are in a similar position, and some much worse. I have already contacted the DCA via email (as I have read all dealings should be in writing) but as yet, have had no reply! I will definately contact the National Debtline and the Business Debtline and hopefully they will be able to help me sort it.
  Thanks again for taking time out to offer help and support
  Kind Regards
  kc
• I am very sorry to hear of your plight. I know it is a very tough time for small businesses at the moment, especially in retail what with Amazon etc.
  It is a small business mantra: The cheque's in the post. A great many suppliers (who may be struggling themselves) hear this all the time and some may become so hardened that they stop believing their customers on the grounds that so many of them owe money. Most suppliers will work together with you to reduce the debt, it's a shame that this firm won't.