Running a business is a balancing act – a book balancing act. Keeping a business’ cash flow healthy, whether you’re running a limited company or operating as a self-employed sole trader, can be a challenge. 

The business can lose money in ways you might not have thought of, and while they might seem inconsequential, they can soon add up and, if you don’t take decisive action, push your business into the red. 

So, here are five unexpected ways a business can lose money. 

1. Sudden outgoings 

Even the best of plans can’t factor in every eventuality. Consequently, sudden, unexpected events such as a fire, theft, or an increase in costs for a service that the business relies upon can alter financial projections and lead to a rise in costs. For this reason, it’s always advisable to keep some money aside as an ‘emergency’ fund. Otherwise, a change in the price of a necessary resource or a sudden outgoing that needs immediate attention could push your business’ accounts into the red. 

2. Not chasing unpaid invoices 

At the end of the day, your business needs paying for the service or product it provides. Asking for money can be awkward, especially after you’ve already sent an invoice, but not chasing unpaid invoices can leave a gap in your business’ finances. Not only that, but it can also leave an impression among suppliers and customers that your business is lax in claiming what it’s owed. Keep track of who still needs to pay you, and remember to remind them to do so.  

3. Unused and underused services 

Marketing is a powerful tool, and many services (subscriptions, utilities etc.) can lure you into purchasing with highly produced, recurring advertisements. However, before setting up another direct debit or handing over a lump sum, you should weigh the potential benefits against the costs, and consider whether the business can benefit from and afford a new service in the long term. 

Having underused or unused subscription services bleeding your business’ bank account, or utilities such as energy and high-cost suppliers where a lower-costing alternative would suffice, is a sure-fire way to lose money that would be better spent elsewhere. For this reason, we’d recommend regularly reviewing the services your business pays for, and if you see one that you’re not getting the most out of or has a cheaper alternative, consider switching or dropping them. 

4. High level of staff turnover 

While not as direct a loss of funds as a sudden, bad debt, failing to maintain employees has many hidden costs that businesses might not consider. 

Finding people to replace the staff who’ve left requires spending on recruitment and advertising. Even hiring temporary workers to plug the gap, if necessary, has a cost. Outside of monetary investment, training new staff can lead to a loss of productivity, as existing staff have to put in the time to train a new employee. Such a process can be time-consuming for staff who could better use their time doing their actual jobs. 

5. Not taking action when finding out your business is in debt 

So, say the worst happens: you find your business can’t repay its liabilities as and when they fall due, or the orders aren’t coming in at a fast enough rate to cover the excessive outgoings. The worst thing you could do in these circumstances is to bury your head in the sand and hope the problems will just go away. Ignoring your business debts can lead to creditors escalating their debt recovery action. What starts out as written and telephone reminders can quickly escalate to County Court Judgements, damaged credit ratings, and visits from bailiffs.  

In the worst-case scenario, creditors can apply for a winding-up petition and close a limited company through compulsory liquidation.  

To avoid this, you must take decisive action before the debt becomes unmanageable. In the UK, procedures exist to help businesses; companies, and self-employed sole traders repay or write off a portion of their debts and, where possible, allow them to continue trading or to walk away and start again. 

Companies can repay a portion of their unsecured debts through a Company Voluntary Arrangement (CVA). This arrangement allows them to continue trading while repaying what they can afford. The directors also receive protection from creditor pressure for the arrangement’s duration. 

Sole traders can take similar action by entering an Individual Voluntary Arrangement (IVA). 

If repaying won’t be enough, insolvent companies can explore administration, wherein a licensed insolvency practitioner acts as an administrator while trying to make the company appealing to potential buyers.  

Where the debts are of such a level that recovery isn’t feasible, directors can put their company into Creditors’ Voluntary Liquidation (CVL), closing the company and drawing a line under its debts, allowing the directors to move on and start afresh. 

Sole traders in a similar situation can apply for personal bankruptcy, writing off most of their unsecured debts and can be useful if they don’t have high-value assets, or little to no equity in a home. 


Balancing a business’ books can be challenging. Even when you think you’ve factored in everything, sudden, unforeseen outgoings can lose the business money. Keep an emergency fund so your business isn’t immediately plunged into the red at the first unexpected outgoing. Ensure you stay on top of who has and hasn’t paid their bills. Make sure your business is making the most out of the services it pays for, consider cutting back on those it isn’t, and try to keep staff turnover to a minimum to avoid the high costs of training replacements. If all else fails and the business finds itself with unpayable debts, act as soon as you become aware of them to ensure they don’t lead to further creditor action, which could jeopardise the business’ future.