Every business owner dreads the day when they don’t have enough cash to pay the bills on time.  This can occur at different stages of the business.  You expect this to happen when you’re in the early stages of business and you just simply run out of money; there’s not enough or no income coming in and you’ve depleted your own resources trying to get the business up and running.

But not having the funds to pay the bills on time can creep up and catch you unawares at a time of growth and apparent prosperity in the business.    These are the times when business owners who don’t understand their numbers come unstuck and worry and stress levels shoot up dramatically.

Is it Permanent or Just a Temporary Issue?

This is the first question to seek answers to.  One of the easiest ways to identify this is to prepare a cashflow forecast for the ensuing 6-12 months.  This will show the months with positive cash flow and those with a shortfall.

For example, I’ve just recently been working with a business that does large contracts and has a number of contracts signed and in progress.  There is a significant portion of the contract paid up-front and the balance over the period of delivery.   They have capacity to take on another contract and have put in place the staffing levels to deliver on that contract.  

The issue was that there wasn’t much money in the bank and the monthly bills hadn’t been paid.  The cashflow forecast showed that the situation would be permanent with the existing contracts, but if they sign up the additional contract, the situation is temporary and they would be cashflow positive in a couple of months. Their focus now is to lock in that extra contract quickly.

In the event that the situation appears permanent, you will either need to find additional resources to put into the business to cover the bills, cut down costs immediately and continue trading or you will be running your business whilst insolvent and will need to appoint a receiver or liquidator to the business.  

Have You Told Your Suppliers?

When you’ve determined what the issue is and your potential way through to positive cash flow, I recommend that you have a conversation with your major suppliers.  And I mean a conversation; pick up the phone and talk to them or arrange a meeting with them to explain your position.

The conversations will depend greatly on the extent of the issue.  But in my experience by talking to the suppliers you will find that within reason they will do what they can to support and assist you.  It is in their best interest for your business to continue so that they can continue to supply to you.

Telling your situation to your suppliers takes courage to do but the rewards are well worth the effort.  

Ask Your Suppliers For Changed Payment Terms

The fundamental purpose of the conversations with your major suppliers is to tell them that you are having cash flow difficulties and agree a solution.  At your discretion, you may be happy to share with them exactly why you’re in that position (eg. one of your major account customers has been put into liquidation).  

In all conversations, though, you need to be providing a solution; the solution being either a delayed payment, or payment terms over x number of months.  The details of what you can offer will come from re-working the cash flow forecast.

I’ve seen situations where the major supplier to the business has allowed the business to pay off the existing bills over a couple of years, with the proviso that the current new bills are paid on time.

I’ve seen other situations where payment arrangements were put in place for every single creditor of the business; each received a small payment every month.  It took the business three years, the owners didn’t take any holidays, they lived frugally, but over that period they paid back every cent they owed, they kept their pride and good record and when everyone was paid back they were able to start to enjoy life again.


Not having the money to pay your bills on time is a stressful situation, but one that doesn’t need to be stressful if you look at the numbers and put in place a considered plan, communicate this with your suppliers and gain their support.