Paying back commercial debts is a process businesses should prioritise. There are various penalties that could be sent to businesses that do not pay their commercial debts, and you wouldn’t want to be one of them.
It is important for businesses to remain on top of their finances otherwise they could face hardship in the future, especially when inflation is rising for many industries. The commercial debt procedure should not be neglected, since non-compliance with creditors’ terms may result in hefty costs.
What is commercial debt?
Commercial debt is any outstanding money that a business owes to another party. This could be in the form of an invoice, loan, or credit card balance. It is important to remember that commercial debt is different from personal debt, as it can have a much bigger impact on a business’s cash flow and ability to trade.
How often is commercial debt not paid back?
Although it’s difficult to get an exact figure, it’s estimated that around 20% of businesses in the UK have some form of commercial debt that they are struggling to repay. This number has likely increased during the pandemic, as many businesses have been forced to close or reduce their business activities.
What are the penalties for not paying back commercial debts?
Potential penalties businesses could face for not paying back commercial debt include:
– Being blacklisted from future borrowing
– Higher interest rates on any future loans
– Damaged business relationships
– A hit to your business’s credit rating
– Possible legal action
– Compulsory Insolvency Action
How do commercial debts impact my business?
If not managed correctly, commercial debt can have a major impact on your business. This is because it can put a strain on your cash flow, making it difficult to pay for other important things such as
What can I do to resolve commercial debt?
If you’re struggling to pay back commercial debt, there are a few things you can do to try and resolve the issue. These include:
– Speak to your creditors: If you’re struggling to make repayments, the first thing you should do is reach out to your creditors. They may be able to offer you a payment plan or extended repayment terms.
– Review your expenses: Take a close look at your business expenses and see if there are any areas where you can cut back. This extra cash can then be used to pay off your debts.
– Negotiate with creditors: If you’re unable to reach an agreement with your creditors, you may be able to negotiate a settlement. This involves paying off your debt for less than the full amount owed.
If you’re struggling to pay back commercial debt, it’s important to take action as soon as possible. There are a number of potential penalties you could face, and the sooner you take steps to resolve the issue, the better.
Working with a debt collection agency can help you reclaim unpaid debts from your clients. As a business, it is important to remain on top of your finances and end up in situations that will mean you face any of the potential penalties listed above. Contact our team now to see how we can help your business reclaim unpaid debts.