Business Debt

When a business gets into debt the effect on the individuals involved can be profound. Whether the company is limited by guarantee, a sole trader business or partnership, an individual can find themselves liable for business debts.

How do businesses get into debt?

Sometimes a business overstretches itself and, much in the same way an individual might, finds it cannot meet its financial commitments. In other cases, businesses simply struggle to make a profit, and there are many reasons why this might be so. A common cause of business debt, however, is simply a cash flow problem, where a business cannot pay suppliers or other creditors as customers are late in paying their invoices. The old adage that “cash is king” holds true; a business can be very profitable on paper but without steady cash flow can find itself in debt.

Knowing that this is a fairly common problem is no consolation to a business owner faced not only with the winding up of his or her business but also a mountain of debts for which he or she is now personally liable.

The effects of business debt on individuals

Often individuals will give up a full time job to start their own business and if that business fails the effects can be far reaching. Not only is there the immediate problem of requiring an income to meet day-to-day expenses such as mortgage payments, electricity bills etc, but the failure of the business can often mean that the individuals involved are liable for the outstanding business debts. Clearly this is a very stressful situation to find yourself in, which in itself can have a knock on effect on family and personal relationships.

How to deal with business debts

The first thing to remember is that if your business has failed, for whatever reason, you are not alone. Statistics suggest that up to 50% of all businesses fail in the first two years, and as we have already learned, there are many reasons for this, from soaring energy prices pushing up costs to late payment of bills by customers.

Many of the techniques used to help individuals in debt are also used to help those faced with business debt. The first step is to pick up the phone and speak to Debt Consolidation Online.

How can DCO help?

All the debt counsellors at Debt Consolidation Online are trained and experienced in helping people suffering under the burden of business debt. With the right help and guidance it is possible to deal with your business debt and make a fresh start.

Take the first step to dealing with business debt problems; pick up the phone and call DCO on 0800 082 050 60