Which creditors should you speak to first?

The loudest caller takes the day

A building supplier is calling every morning, the bank has emailed a warning and a quieter subcontractor is still waiting for payment. The business owner spends the day answering whoever calls first, without noticing that a formal document has a response date approaching.

Separate contact order from payment order

This is a plan for conversations, not a rule that one type of creditor should always be paid first. Payment decisions can have legal and insolvency consequences. If the company is struggling to meet debts generally, ask a qualified adviser about those consequences before making unusual payments, especially to related parties or personally guaranteed creditors.

Source: ASIC — Liquidation: creditor guide

Bring formal deadlines to the front

Put court documents, statutory demands, enforcement notices and other dated notices in a separate urgent folder. Record when and how they arrived and arrange the relevant legal advice. A creditor discussion may be useful, but it does not automatically stop a court timetable. Do not let an agreement to call next week replace a response that is due sooner.

Identify services the business depends on

List suppliers or facilities whose loss would stop profitable work, access to premises or essential equipment. Contact them with a clear explanation of the practical impact and a realistic proposal. Work out whether continuing the service creates more debt than the business can support. Keeping every account open is not a sound goal if trading keeps increasing losses.

Use one current set of numbers

Build a single creditor schedule and dated cash forecast, then use those figures in each discussion. Business.gov.au recommends monitoring cash movement to understand funding needs. Different promises made by different staff can exceed the same available cash. Nominate one person to coordinate offers and record the conditions attached to each response.

A creditor who has not called may still be relying on payment. Agree a contact schedule covering everyone affected rather than rewarding persistence alone. State when an update will be given even where no payment offer is yet possible. If the numbers cannot support a credible overall plan, use that evidence to seek restructuring or insolvency advice promptly.

Source: Business.gov.au — Guide to managing cash flow

Schedule the urgent conversations

Sort formal notices by response date.

Identify essential operating dependencies.

Use one cash forecast for every offer.

Log the next contact date for each creditor, including quiet accounts.

Call CRP today about creditor pressure and coordinating a realistic business debt plan.