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What To Do When You Can’t Pay Your Bills

What To Do When You Can’t Pay Your Bills

Cash flow is king for small business. It can make or break a business in the blink of an eye. Cash flow or the lack there of has nearly broken our business on several occasions. The lack of cash flow could mean bills don’t get paid. But what do you do what you can’t pay your bills? Let’s look at a case story of our own, and then I’ll explain how we dealt with it.

can't pay your bills

Just prior to Christmas last year, we were gunning really hard to meet a couple of targets, specifically this meant we had to get a house slab down, as well as windows and cladding in on another job. These two jobs were the precursors to major draws. When you are the builder, the contract you have with your client, allows for several major draw invoices during the duration of the job. While these are rarely weighted in a way that allows for great cash flow, when your accounts are set up well, generally you can get through.

These two major draws were crucial for us to be able to pay the bills we needed to pay, and I’m not frightened to say those two draws were worth more than $100k. As Murphy’s law, would have it, we met neither of these targets and it wasn’t our fault. On one job, we had a storm that broke every window prior to it being installed, which meant for that job we were at a standstill until we could order a new set of windows. (which only arrived last week) and on the other job a mistake made by a third party, meant we could only get footings in prior to Christmas. So, in short, through no fault of our own, we were more than $100k out of pocket going into Christmas with a 3 week shutdown.


The issue here is we had bills to pay in excess of the money we were due, and no way to pay them until the invoices were paid, and I don’t mind telling you, they still have not been paid. So, what did we do?

Panicked, cried, panicked, opened a bottle of wine, draw all the money out of our mortgage to pay as many people as we could, panicked, cried had another bottle of wine and then we began to plan. This is a common issue in construction, as the invoicing draws are weighted for the clients and bills need to be paid before we get paid, so although there was a lot of panic, we did know what to do.

There are two tips I can give you, answer your phone and be proactive. I cannot change the fact I have no money, I cannot re-mortgage my house, I cannot find money I don’t have, BUT I can be honest with my suppliers and subbies and ask for extension and forgiveness. Most people just want to know they will get paid, even if that means a wait. 95% of our subbies and suppliers are happy to wait for their money, so long as they know we have a plan and will pay them asap. For us that means we outline what we are expecting to our debtors and then let them know a proposed payment date. This may mean that we part pay most people in order to get them some money.

Most importantly is continuing to answer your phone. As difficult as it may be, communication is key. Be honest, upfront and respectful of their feelings. Be brave, this is a common issue, your debtors will be no stranger to it, allow them to help you.

Are you a small business owner? Have you have difficulty paying your bills?

Nicole xxx

Linking up with Kylie Purtell for #IBOT




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  1. Interesting post. I guess it’s ‘easier’ to avoid the conversation but that’s a problem…

  2. As someone who often finds herself dealing with outstanding accounts, I think your approach is perfect. Being open, honest and keeping your debtors in the loop is key. It’s the debtors that put their heads in the sand and stop answering calls that make me nervous (and whom are more likely to wind up being served in the long run.)

  3. That would be a scary situation.

  4. I can imagine how stressful that would be. I think your approach is great. Keep those lines of communication open. Hiding will only make problems worse.

  5. Oh goodness how stressful!! You are absolutely right though. People are remarkably OK about things like this is you front up and face them. I used to work for a small company with terrible cash flow and I had to make a lot of those calls!

  6. Sorry to hear this has happened. I agree though, communication is key. Most people are just fine with a call and an explanation. Hope it all comes together for you.

  7. We’re there right now. It sucks. I know it will pass, but with the BAS looming and a pile of suppliers waiting it’s stressful.

  8. How stressful! I agree with you though, honesty is always the best policy!

  9. Wow! Sounds like a tough business to be in when things like that happen that are out of your control!


  10. Oh wow that sounds so stressful. I only need to keep our household accounts balanced and that’s hard enough at times! But you’re so right when you say honesty and communication is the key. Well done on getting through what sounds like a really tough situation so calmly. #teamIBOT

  11. When I had the financial delegation to pay for expenses in one construction job, I always tried to pay the small businesses first. Often they were things like tiny regional motels where my field staff were staying for a few weeks – I wanted them paid up so they had cash flow! One or two even called me to say thank you for always paying fast – I really figured it was the least I could do.

  12. Communication is great. Nothing worse than ringing a client/business and they don’t answer their phones and can’t tell you when they can pay you.
    But this issue shows the breakdown in the chain of construction. It’s always the blame game – ‘my subbies caused me not to pay my bills’ or ‘my builder didn’t pay me so I can’t pay my suppliers/subbies’. After heading to various functions with the Master Plumbers last year, bills not being paid on time is one of the biggest issues facing small business and the stress is affecting the lives of many tradespeople. So much so, suicide rates are high amongst tradesmen. The statistics shocked me. It’s so important that if you do run a business, there is enough cashflow to allow for not being paid, but many construction and building businesses don’t run this way. I can go by my experience and our family lost our house when 4 builders went broke on dad. He lost over a million dollars and back in those days and that was a huge amount of money. But the beauty of hitting rock bottom is you can work your way up. All I know is if you don’t build cash flow, and you get into predicaments of not being able to pay suppliers/subbies or where ever the bills come from, it’s a stressful time for all. In the perfect world, all jobs would go well and everyone would be paid on time, but that doesn’t happen. So the only key is ensuring you have enough cash flow to ride the hard times. It’s been a good post to raise the issue, but there are viewpoints from both sides that need to be recognized I think. ?

  13. This challenge is our constant companion. As a wholesaler, you have to buy the goods in before you can sell them, and then you have to wait for the end of month + 30 days to get paid. Or longer if they aren’t good at paying their bills.

  14. Your last paragraph is so important. People tend to be more forgiving if you’re upfront with them.

  15. I used to work in debt collection BC (before children) and these tips are spot on. So many folk bury their heads in the sand like an ostrich and it just make things worse. Most creditors are understanding IF they know what’s going on.

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