If your company cannot pay a supplier by the due date, the worst thing you can do is go silent. Most suppliers would far rather hear from you early than have to chase repeatedly — and many will work with you if you approach them before the payment is overdue.
Contact the supplier promptly
Call or email as soon as you know there will be a problem. Explain the situation plainly: you have a short-term cashflow gap, you intend to pay in full, and you would like to agree a revised date or a short instalment arrangement. Put any agreement in writing — even a simple email trail protects both sides.
- Be specific: offer a realistic date rather than vague promises.
- If you can pay something now, offer a part-payment to show good faith.
- Ask whether they can suspend late-payment interest or charges while the arrangement is in place.
Understand your legal position
Under the Late Payment of Commercial Debts (Interest) Act 1998, your supplier is entitled to charge statutory interest on overdue invoices between businesses. That does not mean they will — many suppliers waive it for customers they want to keep — but it is worth knowing. Ignoring the debt can also lead to a county court judgment (CCJ) against the company, which damages your credit profile.
Look at your wider cashflow
A missed supplier payment is rarely an isolated event. Use it as a prompt to review all upcoming payments and receivables. Can you accelerate collection from your own customers? Are there non-urgent costs you can defer? Short-term financing options such as a revolving credit facility can sometimes bridge the gap while you stabilise.
We lend only to UK limited companies and LLPs, and the loan is to the company with no director personal guarantee. As business finance outside the consumer-credit regime, it is not covered by the Financial Ombudsman Service or FSCS.
See also: Early warning signs your cashflow is under pressure, How to talk to creditors when your business is struggling.