What happens if my company runs out of cash next month?

If your company runs out of cash next month, you face immediate operational difficulties including an inability to pay staff wages, supplier invoices, rent, and critical expenses like utilities. This situation can quickly escalate into a liquidity crisis that threatens the company's survival. Directors must act immediately by reviewing all available options. Start by preparing an urgent cashflow forecast to understand exactly when funds will be exhausted and which payments are most critical. Contact your bank to discuss emergency overdraft facilities or short-term funding options, though be realistic about whether this simply delays the inevitable. Speak to major creditors, particularly HMRC, about negotiating payment deferrals or time-to-pay arrangements. Consider whether any assets can be quickly converted to cash, such as selling unused equipment or collecting overdue debts more aggressively. If the cashflow shortage is temporary and the business is fundamentally viable, these measures may buy enough time to stabilize. However, if the cash shortage reflects deeper insolvency, directors must seek professional insolvency advice immediately to avoid accusations of wrongful trading. Continuing to trade without sufficient funds to meet obligations as they fall due is the legal definition of insolvency, and directors who ignore this risk personal liability for debts incurred after the point insolvency became apparent. The key is to act decisively within days, not weeks, because once suppliers withdraw credit and staff lose confidence, recovery becomes exponentially harder.