Debt Warning Signs

Debt warning signs are not always easy to detect unless you closely monitor your company performance and management accounts on a regular basis. Large companies will have departments dedicated to this function but for the small business owner it is not always apparent that debt problems are present until it is too late.

The following gives an overview of some of the common warning signs:

Stock Levels

Maintaining adequate stock levels is important for many businesses but sometimes over production can tie up available resource to the detriment of other elements of the business. Proper management in line with realistic projections is important for business survival and prosperity.

Bank Balance

It may sound obvious, but a declining bank balance can be a real cause for concern. Small business owners may choose to ignore this, relying on available credit facilities to meet cash requirements such as salaries and creditor payments.

However over reliance on such facilities and a prolonged downturn in the trading position can have severe consequences. It is important to assess the business cash position on a regular basis in order to spot and address problems early.

Late payments

Do you constantly find yourself in a position where invoices are paid late? If it becomes the norm due to cash constraints, suppliers and creditors are likely to lose patience and may threaten to commence recovery proceedings. This can have an adverse effect on the business in the event credit facilities are removed or contracts terminated.

Recovery action

A clear sign of debt problems is the issue of final demand letters or the commencement of recovery action via court proceedings. When matters reach this point it is important to review the company position and take advice if you haven’t done so already.


If you are unable to pay any tax due then HMRC will impose penalties and interest for late payment. Continued non-payment will result in enforcement proceedings being issued.