If your company cannot meet every payment due this week, start by finding out exactly what is due, what cash will arrive, and whether any creditor has already taken formal action. Record the board’s decisions and get advice before making commitments the company may not be able to keep. You do not have to choose a liquidation procedure before that first conversation.

Work out the immediate cash position

A bank balance is only a starting point. Make a short list covering the next seven to fourteen days:

• Cash in the bank, available borrowing and receipts you can reasonably expect to collect. Separate promised payments from money that is certain to arrive.
• Payroll, rent, suppliers, loan instalments and tax falling due, with the date and amount of each.
• Work already promised to customers, its cost to complete, and any customer money received for work that remains unfinished.
• Arrears, creditor letters and deadlines. Put any HMRC notice, statutory demand, court document or notice of diligence at the top of the pile.

This is a working picture, not a set of perfect accounts. If a figure is uncertain, mark it as an estimate. The question is whether a realistic plan exists to meet obligations as they fall due, not whether the spreadsheet balances neatly.

Record what the directors decide

Bring the directors together promptly, even if the business is small. Note the information used, the alternatives considered, any payments proposed and why, and when the position will be reviewed. Keep the underlying bank records, ledgers, contracts and correspondence. A clear record helps an adviser assess the position and shows how decisions were reached.

When a company is insolvent, directors’ priorities shift towards creditors. The Insolvency Service says directors should protect company assets, avoid worsening creditors’ position and consider advice from an insolvency practitioner. That makes hurried decisions about selective payments, new credit, asset transfers or fresh customer deposits particularly important to discuss before acting. The right answer depends on the facts; it is not a rule to stop every payment automatically.

Identify the pressure that cannot wait

There is a difference between a supplier asking for payment and a court deadline. Check what each document actually says, when it was received and who issued it. Scottish creditor remedies and court procedures have their own steps. Our Creditor Pressure pages explain common forms of action; if a winding-up petition or bank arrestment is involved, seek case-specific advice urgently.

Tell an adviser about payroll and essential trading costs as well as creditor demands. A business that looks viable on a profit-and-loss account may still run out of cash before its customers pay. Equally, a short cash gap does not by itself tell you which formal process is appropriate.

Decide what must happen next

Take the cash list, recent bank information and the most urgent creditor documents to the first call. Ask:

1. Can the company fund the work and obligations it proposes to take on now?

2. What information is missing from the cash forecast?

3. Is a credible short-term agreement with creditors possible?

4. Is there a viable business that could justify a rescue route?

5. If not, what is the orderly way to stop trading and deal with creditors and staff?

The possible routes may include negotiated terms, a formal rescue process or a creditors’ voluntary liquidation. Their availability and timing depend on the company’s circumstances. The first job is to establish a reliable position and avoid losing time on a plan that cannot be funded.

Must we stop trading today?

There is no answer that fits every company. Continuing to trade needs to be assessed against realistic cash and prospects and the effect on creditors. Seek advice before taking further orders or incurring costs if you cannot see how the company will meet them.

Does a missed payment mean we must liquidate?

No single missed payment selects a procedure. Inability to pay debts when due is, however, one way a company may be insolvent. Get the whole position assessed promptly rather than waiting for every creditor to act.