How to talk to creditors and buy time

When cash runs short, most business owners do the same thing: they go quiet. They stop answering unknown numbers, leave emails unopened and hope next month's sales will fix it. It's completely human, and it's the most expensive thing you can do. Creditors who can't reach you assume the worst and move to the next step in their collection process.

The owners who come through a tight patch in the best shape are nearly always the ones who talk to creditors early and clearly. This guide covers who to contact first, exactly what to say, what to put in writing and how to turn a few weeks of breathing room into a proper fix. Most of it costs nothing. Where funding helps, we'll show you how fundU can pay creditors out so the pressure actually ends.

Why does talking to creditors early buy you more time?

Because most creditors want to be paid, not to fight. Collection action costs them time and money, and a business that stays trading is more likely to pay in full. When you call first, you give them a reason to wait.

Silence does the opposite. Automated systems escalate missed payments, account managers hand files to collections, and suppliers put you on stop credit. Once a file is with a debt collector or a lawyer, the person you're dealing with has less discretion and less reason to be flexible.

The early call also protects your options. If you later need a loan to pay creditors out, a lender will want to see that relationships are intact, that there's no liquidation application on foot and that creditors are willing to accept payment. Those conversations are much easier when you've kept everyone informed.

Which creditors should you contact first?

Contact the creditors who can do the most damage fastest, not the ones who shout loudest. A quick triage keeps you focused.

Creditor	What they can do if ignored	What they usually want	How to approach
Inland Revenue	Add penalties and interest, deduct from bank accounts, take enforcement action including liquidation	Returns filed and a realistic plan	File returns, then propose an instalment arrangement in myIR
Secured lender (bank or finance company)	Default the loan, call it up, enforce security	Early notice and a credible plan	Call your account manager before the missed payment
Landlord	Issue notices and take steps under the lease	Rent arrears paid and confidence you'll stay	Meet in person with a written catch-up plan
Key suppliers	Stop credit, stop deliveries	Payment for past supply and cash on delivery going forward	Offer part payment now and a dated schedule
Staff	Leave, raise a claim	Wages paid in full and on time	Protect wages as a top priority; don't ask staff to wait
Unsecured and small creditors	Send to collections, issue a statutory demand	Contact and a date	Short email with a firm payment date

Wages deserve special mention. Your team keeps the business running, and late wages cause problems that no payment plan can fix. If you're choosing between creditors, protect payroll and the PAYE that goes with it.

What should you say when you call a creditor?

Say what's happened, what you're doing about it and what you can offer, in that order. Keep it short, specific and honest. Creditors hear excuses all day; what stands out is a clear plan.

A simple structure that works:

1. Name the account and the amount. "I'm calling about invoice 4471, which is due on Friday."
2. Explain briefly and honestly. "A major customer has paid late, and our cash is tight this month."
3. Say what you're doing. "I'm arranging funding against property to clear our overdue accounts."
4. Make a specific offer. "I can pay a third on Friday and the balance by the 20th of next month."
5. Ask for what you need. "Can you hold the account open on those terms?"
6. Confirm in writing. "I'll email you that plan today so we're both clear."

Avoid vague promises like "as soon as I can" or "next week sometime". They sound like stalling. A dated offer, even a modest one, shows you're in control.

Always follow a phone call with a short email that sets out what was agreed, the amounts and the dates. It protects you if staff change on the other side, and it makes it easy to show a lender later that creditors have accepted a plan.

How do you buy time with Inland Revenue?

File first, then talk. Inland Revenue is far more flexible with a business that has its returns up to date, even if it can't pay yet. Unfiled returns lead to estimated assessments and make any arrangement harder.

In January 2026, Inland Revenue announced a campaign on overdue GST and employer (PAYE) debt and returns. It said it would contact customers, then may visit, make deductions from bank accounts or take other enforcement action, which may include bankruptcy or liquidation. It encouraged businesses to set up instalment arrangements in myIR.

An instalment arrangement can give you time, but it isn't free. Late payment penalties and interest may continue on the overdue balance, and the arrangement adds a fixed monthly outgoing on top of your current GST and PAYE. That's why many owners use one as a short bridge while they organise funding to clear the debt in full. Our guide comparing an IRD instalment arrangement with a business loan sets out the trade-offs, and our IRD tax debt loans page explains how we can pay Inland Revenue directly.

How do you handle a statutory demand?

Treat it as urgent from the day it arrives. Under section 289 of the Companies Act 1993, a company served with a statutory demand has 15 working days to pay the debt, settle it to the creditor's reasonable satisfaction or apply to court to have it set aside. If none of those happen, the creditor can apply to liquidate the company.

Fifteen working days is about three weeks, and it goes quickly. On day one:

• Call the creditor, acknowledge the demand and ask what they'll accept to withdraw it.
• If you genuinely dispute the debt, talk to your lawyer straight away about setting it aside.
• If the debt is owed, start arranging funding immediately rather than waiting to see what happens.

We explain the whole timeline in what to do about a statutory demand. The key point for this guide: a creditor who has issued a statutory demand has already lost patience. Early conversations are how you stop it getting that far.

What should a written payment plan include?

A good payment plan is one page, clear enough that a creditor can say yes without a meeting. It shows you've thought it through and gives them something to hold you to.

Include:

• The debt: invoice numbers, amounts and due dates.
• The cause: one or two sentences, no drama.
• The fix: what's changing, such as funding being arranged, a large contract payment due or costs being cut.
• The schedule: specific amounts on specific dates.
• Current trading: a commitment to pay new invoices on normal terms, or cash on delivery.
• A contact: the person who will keep them updated.

Only offer what you can definitely deliver. It's better to promise a smaller amount and pay it on the day than to promise more and miss. Every kept promise earns more flexibility; every broken one loses it.

What if a creditor won't agree to a plan?

Some creditors will say no, especially if the account is already with a collector or you've missed earlier promises. That doesn't mean the conversation failed. It tells you which debt has to be dealt with first.

When a creditor refuses a plan:

• Ask what they would accept. A larger first payment, a shorter schedule or a firm settlement date backed by funding often changes the answer.
• Get the payout figure in writing. If they want the full amount, you need an exact, dated number to take to a lender.
• Move that debt to the top of your funding list. An unwilling creditor is the one most likely to issue a statutory demand or a court claim.
• Keep the tone calm and professional. Record who you spoke to and when. You may need that history later.

A creditor who won't wait is often the clearest sign that a short-term plan isn't enough and a funded solution is needed.

Why buying time isn't the same as fixing the problem

Breathing room is only valuable if you use it. A payment plan spreads the debt out but doesn't remove it, and every arrangement adds another fixed outgoing to a cash flow that's already stretched. If the underlying shortfall is still there, the next crunch arrives on schedule.

Use the time you've bought to do three things:

1. Find the root cause. Late-paying customers, a lost contract, seasonal dips, expensive short-term debt or rising costs each need a different fix.
2. Build a 13-week cash flow forecast. Week by week, show what's coming in and going out, including every arrangement you've agreed.
3. Organise a lasting solution. For many property-owning business owners, that's a loan secured against property that clears creditors in one go and replaces several deadlines with one plan.

Liquidation can look like a clean escape when you're exhausted, but it rarely is. The Insolvency and Trustee Service explains that the liquidator takes control of the company's unsecured assets, which are sold to repay creditors, while directors must complete a statement of affairs and help the liquidator find records and assets. Liquidators charge fees, and directors lose control of the outcome. If the business is viable, funding it out of trouble usually preserves far more value. Our guide to alternatives to liquidation covers the options.

Example scenario

A joinery business in Canterbury fell behind after a builder client went quiet on a large invoice. Within six weeks the owner had overdue GST, two months of rent arrears and a timber supplier threatening stop credit. He'd been avoiding calls.

He started by filing the outstanding GST returns and calling each creditor with a dated plan: part payments within a week and the balance within five weeks, once funding was in place. The landlord and supplier agreed in writing. The owner and his partner had equity in their home, which was worth about $880,000 with a bank mortgage of around $390,000. fundU approved a second mortgage of $120,000, which settled within the timeframe he'd promised and paid Inland Revenue, the landlord and the supplier directly. The loan was structured interest-only, with the exit being the builder's invoice, which the owner was pursuing separately, and a bank refinance. This is an illustrative example, not a real customer.

Key takeaways

• Call creditors before you miss a payment. Silence triggers collection processes that are hard to reverse.
• Triage by damage: Inland Revenue, secured lenders, landlord, key suppliers and wages come first.
• Use a simple script: the account, what happened, what you're doing, a specific offer, a written follow-up.
• File your tax returns before asking Inland Revenue for an instalment arrangement.
• A statutory demand gives a company only 15 working days. Act on day one.
• Buying time is a bridge, not a fix. Use it to organise a lasting solution.

Turn breathing room into a real solution

If you've bought some time and need funding to clear creditors for good, fundU can help. We're a direct private lender, we make our own decisions, and our loans of $20,000 to $1m are secured on New Zealand property. Read about business rescue finance, or if a deadline is close, our urgent business loans. When you're ready, see if you qualify. It takes a couple of minutes, won't affect your credit score and a lending specialist will call you back. You can also call us on 09 875 4577.