Several creditors chasing at once: who to pay first, and why

When one creditor is chasing, you deal with it. When five are chasing, the instinct is to pay whoever rang most recently, or whoever sounded angriest. That’s understandable and almost always wrong. The creditor with the loudest voice isn’t necessarily the one who can do the most damage. A calm order of payment — based on consequences and deadlines — protects the business and you.

How should I rank my creditors?

Use consequences and deadlines, in roughly this order:

Priority	Creditor or pressure	Why it ranks here
1	Garnishee in force	Your cash is already being redirected
2	Director penalty notice, statutory demand, bankruptcy notice, winding-up application	Legal clocks with personal liability, presumed insolvency or bankruptcy at the end
3	Wages, super, PAYG withholding	Your people, and debts that can become personal for directors
4	Premises (rent) and secured lenders with default notices	Losing either can end trading
5	Suppliers you can’t trade without	Supply stops, revenue stops
6	Other ATO debt without firmer action yet	Growing interest, rising risk
7	Other unsecured creditors and collectors	Real, but slower to escalate

The which-debt-first sorter turns this into a personalised list: tick what’s chasing you, and it groups them into today, this week and this month.

Why do director debts jump the queue?

Because some company debts can become yours. PAYG withholding, GST and super guarantee charge all sit inside the director penalty regime. If the company doesn’t pay and a director penalty notice goes unanswered for 21 days, the directors become personally liable. A supplier invoice, by contrast, generally stays with the company unless you signed a personal guarantee.

So if you’re choosing between an angry supplier and the next BAS, the BAS usually wins — not because the ATO is more important than your supplier, but because of what’s at stake for you personally.

What about paying some creditors ahead of others?

In ordinary trading, choosing the order of payments is normal. But if a company is insolvent, things change. Payments that favour one unsecured creditor over others can sometimes be recovered by a liquidator later, and directors have a duty not to incur new debts when the company can’t pay them.

That’s not a reason to freeze. ASIC notes that directors of a struggling company may be able to restructure, refinance or recapitalise. It’s a reason to act early and get advice, and to understand the safe harbour protections for directors who are working on a plan.

When does consolidation make more sense than juggling?

If you find yourself paying one creditor by delaying another, month after month, the juggling itself is the problem. A consolidation loan pays several creditors out at once and replaces them with a single repayment:

• Property-secured consolidation, anywhere between $20k and $5m, using equity in residential or commercial property.
• Unsecured or cash-flow consolidation, usually $5,000 to $500,000 and sized to turnover, for smaller balances.

We explain the approach on our business debt consolidation loan page. If you’d like someone to look at whether it fits your numbers, start an enquiry — no credit check is involved in asking.

An illustrative example

Illustrative only. A Sunshine Coast landscaping business has five pressures at once: a supplier’s letter of demand, two months’ rent behind, a quarter of unpaid BAS, a collector on an old fuel card, and an equipment lender threatening a default notice. The owner had been paying whoever called. Using a deadline-first order, she prioritises the BAS and lender, then consolidates the lot with a second mortgage over her home. Five creditors become one lender, the ATO is paid, and the equipment stays in the yard.

What should I do this week?

1. List every creditor, the amount, the date of the latest letter and any deadline.
2. Sort them using the table above or the sorter tool.
3. Lodge any outstanding BAS, even if you can’t pay.
4. Call your top three with a written proposal you can keep.
5. Talk to a funder if the total is beyond what cash flow can fix within a few weeks.
6. Get advice if you suspect the company can’t pay its debts as they fall due.

business.gov.au also points to the free Small Business Debt Helpline on 1800 413 828.

How do I talk to creditors when there are so many?

Use the same approach with each, adjusted for their priority:

• Be first to call. A creditor who hears from you before the next reminder is usually more flexible.
• Be specific. An amount and a date, not “soon”.
• Be consistent. Don’t promise one creditor a payment you’ve already promised another.
• Put it in writing. A short confirming email after every call.
• Keep the top priorities current. Wages, super, withheld tax and anything with a legal clock come first, even while you negotiate the rest.

Want help putting things in the right order?

We spend our days with owners who are juggling. Often the relief comes not from a smaller debt, but from fewer creditors and one clear plan.

Tell us about the creditors and the business — it takes a minute. There’s no credit check involved in a first enquiry, and your details go to one team, not a crowd of lenders who’ll all ring at once. A real person reviews it and calls you. Please list the debts and dates as accurately as you can, so we can tell you straight away whether consolidation is realistic.

Get a real person’s view on your creditors →