Managing Your Creditors

2. Key Creditors

Identify which creditors are vital to the survival and growth of your business. Then work out tactics to win the support of each one.

2.1 Your financial backers are usually top of the list.

• Treat your bank as an investor, by providing regular management accounts in a format which the bank has agreed is useful.
• Make sure you are aware of what would happen if you were unable to make a payment on time. For example, at what point would your hire purchase company repossess the equipment?

2.2 Decide which suppliers are mission critical, on the basis that there is no alternative supplier immediately available.

• IT suppliers (who regularly maintain your IT system) are often high up the list, as trying out a new supplier can be a risk in itself.
• Your landlord may have the right to evict you for non-payment. But your landlord would also have the right to seize goods within your premises, without going to court.
• Suppliers of commodity items, which you can buy elsewhere, are bottom of the list.

2.3 Identify which creditors are likely to be inflexible, and could seriously damage your business as a result.

• Statutory bodies such as HMRC can automatically surcharge you for late payment (see 5 and 6). Your local authority can sue you for non-payment of business rates.
• Utilities suppliers can cut off your telephones, electricity, water or gas.