Effects of Financial Difficulty

There are many ways in which a business can experience financial difficulty and when this happens it can be hard to fully understand what this means to the business and its employees.

This is why it’s important to look out for the warning signs and identify potential issues early

Potential Impact(s) for a Business in Financial Difficulty can include:

  • Personal – A business being in financial difficulty can lead to increased stress and pressure for all employees, especially those owning/managing the business.
    For those where the business is the sole source of income, the impacts can reach beyond the business and affect their personal income and spending ability.
    Further guidance on how financial difficulty can affect individuals can be found here
  • Late Payments to Creditors - If you don't have cash available within the business, you may be forced to take on additional loans or make late payments. This can lead to late payment fees on utilities or debts, thereby increasing the pressures on the business.
  • Reduction in opportunities for growth - You may miss out on opportunities to acquire new stock, acquire assets or even hire new employees. Restricted growth can lead to low employee morale and creates a poor impression to business owners or shareholders.
  • Reduced Competitiveness within an industry – Not being able to take advantage of economies of scale due to a lack in sufficient funds to purchase raw materials in bulk which can lead to a reduced profit margin.
  • Impact on Credit Rating - Frequent defaults or missed/late payments to creditors because of financial difficulty can impact on your company’s credit rating. This may reduce the availability of additional financial support and lead to increased interest and charges.

Credit Reference Agencies

We share information about the position on your account with Credit Reference Agencies. The information shared falls into 3 broad categories, which help banks make their decisions on lending:

  • Positive data - including how long you've maintained your account, past borrowing successfully repaid and current status on existing credit facilities.
  • Negative data - including late or missed payments, banks returning payment instructions, defaulted debts and multiple applications for credit in a short period.
  • Warnings - including whether you’ve had a County Court Judgment (CCJ), Individual Voluntary Arrangement (IVA) or bankruptcy in the last 6 years.

The Credit Reference Agencies we report to are:

I’ve missed a payment, will that show as a default on my credit file?

If you’ve missed a payment, your account will show as in arrears on your credit file. If the payment remains unpaid, or a number of payments are missed, this could lead to a default being registered.

If you do miss a payment (or you think you might) the best course of action is to contact us as soon as possible.

Why is a default showing on my credit file?

This shows when an account has been registered for default, including the date and balance at the time of registration. The default remains in place for 6 years from registration, and if it’s repaid during this time, the bureau updates the entry to show as satisfied and current balance as nil.

What happens to the default registered at the CRA after 6 years?

After 6 years the default will automatically drop off – this is an industry standard length of time. An entry dropping off doesn’t affect your liability to repay the debt.

How can I query an entry on or get a copy of my credit file?

You should contact the agency or agencies directly for further information, as we can’t share any information about what is shown on your files held at Credit Reference Agencies.

Please Contact Us immediately if your business is impacted by any of the factors outlined above and is experiencing financial difficulty, or going to fall into financial difficulty.

For independent debt advice please refer to Additional Support Services for details.

Need help?

Get in touch to learn more about our banking solutions