Ten tips on dealing with debt

1. You may not know that your debts can and should be divided into two different groups – priority debts and non-priority debts. Debts that are directly related to your continuing to trade as usual, like business rent, rates, utilities, HMRC and suppliers are normally a priority. Unsecured credit is normally a non-priority.
2. Make sure any money going into personal and business bank accounts is safe – that means you should not use bank accounts linked to creditors you owe money to.
3. Budgeting is key. Business Debtline has template budgets on its website that will help ensure you don’t miss anything off. Complete a realistic and sustainable budget, this will help you see how much money can be put towards paying off debts. It will also help prevent debts from piling up.
4. If you are tied, it is important that you do not purchase your beer from another supplier. If you do, you are in breach of your lease and the consequences can be serious.
5. Gas, electricity and water bills are priority debts because if you don’t pay them, your business supply can be disconnected. Utility companies have credit control departments. They should try to work with you to negotiate a payment plan for your arrears. They would usually require a payment to cover your on-going use, plus an amount towards the arrears so that they are cleared in a reasonable period of time. You can use your budget to help negotiate this.
6. Business rates are a priority debt because the council has strong powers to collect the money owed. As soon as you find yourself in financial difficulty, speak to the council and provide them with a copy of your business and household budget sheet. Make a proposal to clear the arrears. Start paying what you can afford.
7. If your business is in a rural area and is the only pub in the village, you may be eligible for rural rate relief. For more information, speak to your local council.
8. If bailiffs have not yet been into your home or business premises to collect a debt, they have no right to force their way in. They cannot break in. Do not let the bailiffs in.
9. If you don’t have time to do your own book-keeping, consider paying an accountant – keeping proper records can save you money in the long run. It can be hard to find the time to complete proper records when you are running your business. Also, it can sometimes be difficult to separate business and personal outgoings. For example, business and personal outgoings may become confused if you take food from the pub to feed your family but do not take a proper wage; or your household bills are being paid out of the business bank account.
10. Other sources of help include the Licensed Trade Charity and the British Institute of Innkeeping.

Business Debtline advisers are experienced in helping small business, and especially pubs, deal with debt problems. It is a charity so advice is free and impartial. Tel: 0800 197 6026 or visit the BDL website.