Debt is not inherently negative. Borrowing can fund growth, smooth seasonal dips or help you bridge large orders. Problems start when visibility slips, costs rise or deadlines are missed.
Our guide below sets out the core accounting and cash management practices we encourage clients to follow. Use it as a monthly checklist and adapt it to your business model.
Start with a clear view of your cash position
A 12-week rolling cashflow, updated weekly, is the most useful tool for staying in control.
Forecast inflows and outflows, then add simple stresses such as sales 10% lower or receipts taking thirty extra days to arrive. If the forecast shows a crunch, act before it hits.
Review weekly:
- Aged receivables and payables, focusing on the oldest and highest-value balances.
- Loan covenants, headroom and any forecast breach dates.
- A calendar of obligations covering VAT, PAYE, Corporation Tax, rent, utilities, insurance and scheduled loan repayments. Set reminders at least ten working days ahead.
Assign ownership for chasing, negotiating and paying. Note actions, dates and outcomes. A short weekly review can transform debt control from a fire drill into a habit.
Know today’s costs, rates and rules
Sound decisions rely on accurate and current information.
Key points for 2026 include:
- Bank Rate: 4% (autumn 2025).
- HMRC late payment interest: Bank Rate plus 4% from April 2025.
- B2B statutory interest on late invoices: 8% above Bank Rate, plus fixed recovery costs where terms allow.
- VAT registration threshold: £90,000 rolling 12-month taxable turnover.
- Business rates: multipliers set for 2025/26, with changes and additional reliefs due from April 2026.
In practical terms, HMRC arrears can now cost more than many bank products. Clear or schedule tax debts promptly and keep filings on time to prevent penalties escalating.
Prioritise payments with a clear logic
There is no single correct order for every business. Prioritise by legal exposure and operational importance. A typical structure looks like this:
- Tax arrears (PAYE, VAT, Corporation Tax). Interest accrues daily and enforcement escalates quickly. If in difficulty, contact HMRC early to discuss Time to Pay.
- Secured lending and fixed charges. Missed payments risk covenant breaches and action over pledged assets.
- Energy and critical suppliers. Keep operations running with realistic, written schedules.
- Other creditors and landlords. Be consistent, communicate early and stick to any plan you propose.
- Director or shareholder loans. Watch the tax treatment and avoid repayments that strain cash.
Review the order monthly or when conditions change.
Reduce late customer payments, calmly and consistently
Late payment remains one of the most common sources of cash pressure. With government proposals for stricter reporting and potential fines for persistent late payers, it is sensible to tighten internal processes now.
A light-touch framework works well:
- Standard terms between 14 and 30 days.
- Issue invoices the same day, with correct POs and in accepted digital formats.
- Reminder on the due date, firmer follow-up at seven days, final notice at fourteen days.
- Apply statutory interest and recovery costs where appropriate.
- Use credit limits for new or higher-risk customers.
Record conversations and promises. Partial payment now often beats a larger promise later.
Strengthen cash in the short term
When pressure builds, work both sides of the equation.
Bring cash forward
- Focus on the top ten overdue balances older than sixty days.
- Pick up the phone, agree a plan and confirm it in writing.
- Consider invoice finance for predictable debtors, but check fees, recourse rules and concentration limits.
Defer outflows, sensibly
- Stage large supplier payments with written agreements.
- Switch annual costs such as insurance to monthly where the uplift is reasonable.
- Reduce stock to current demand and clear slow-moving items.
- Cancel non-essential subscriptions and standing orders.
Choose the right funding tool for the job
Different needs require different products:
- Overdrafts or revolving lines for seasonal swings.
- Term loans for defined investments.
- Asset-based lending against receivables, stock or plant.
- Growth Guarantee Scheme facilities, offered through accredited lenders until at least April 2030.
Match the tool to the purpose and compare total costs, security requirements and covenants.
Speak to lenders and HMRC before a breach
Silence erodes confidence. Early, proactive communication preserves options.
When speaking to lenders, prepare a short pack:
- Year-to-date performance with commentary.
- A 12-month forecast with base and downside cases.
- Covenant look-ahead and proposed mitigations.
- A clear request, such as a temporary covenant reset or interest-only period.
When speaking to HMRC:
- Call the Payment Support Service before a deadline passes.
- Have figures ready and propose a schedule you can keep.
- Keep all future filings on time, or HMRC may withdraw the agreement.
When formal restructuring may be appropriate
If debts cannot be met as they fall due, early advice protects you and the business. Options include:
- Company moratorium
- Company voluntary arrangement (CVA)
- Restructuring plan
- Administration
- Liquidation (if rescue is not viable)
Directors’ duties sharpen near insolvency, so keep minutes, avoid new credit and take regulated advice early.
Build habits that make borrowing safer and cheaper
Debt sits more comfortably when supported by strong fundamentals.
- Review pricing and margins regularly.
- Use short terms of trade as standard.
- Avoid single points of failure in supply chains.
- Tighten stock control to reduce cash tied up.
- Consider credit insurance for large exposures.
- Hold a monthly cash and debt review, tracking overdue items, net debt, covenants and forecast accuracy.
Small, frequent adjustments usually beat large, infrequent ones.
If cash is tight, act today
A short action list:
- Update your 12-week forecast with conservative assumptions.
- Prioritise payments and record your rationale.
- Contact HMRC if needed and keep filings current.
- Speak to lenders before any breach.
- Accelerate collections on the largest overdue invoices.
- Freeze non-essential spending and stage larger supplier payments.
- Seek regulated advice if forecasts show debts cannot be met.
How SeavorChartered can help
Debt control improves fastest when everyone has a shared view of the numbers and clear next steps. We can support you by:
- Reviewing your cashflow and borrowing mix
- Building payment plans that protect operations and manage legal exposure
- Tightening invoice terms, chasing processes and credit checks
- Comparing funding options
- Preparing lender and HMRC packs
- Introducing restructuring specialists when appropriate
Looking ahead
If you expect difficulty meeting tax or loan payments, contact us before any deadline passes. Early action keeps more options open and protects both the business and its directors.
Want to stabilise cashflow or build a stronger debt-control routine? Get in touch with the SeavorChartered team.
📞 01228 904904
📧 mail@seavorchartered.co.uk
🌐 www.seavorchartered.co.uk
Disclaimer: This article is for general information purposes only and does not constitute professional advice. Individual circumstances may vary, and you should seek specific advice before acting on any of the information provided. For tailored advice, please contact us directly.
