Can I continue trading if the company is insolvent?
There is no safe answer based only on one overdue creditor or one balance sheet figure. The board should consider cash flow, reasonable prospects, creditor impact and the quality of the information supporting continued trade.
5 min read · Last reviewed August 2026Questions the board should ask
The central issue is whether continued trading has a reasonable prospect of improving the position, or whether it is likely to increase losses for creditors.
- Can wages, taxes and essential suppliers be paid when due?
- Are new orders expected to generate cash rather than consume it?
- Is any rescue or funding plan realistic, documented and time-limited?
- What happens to creditors if the plan fails?
Record the decision
Board minutes should identify the financial information reviewed, assumptions made, advice obtained and reasons for the decision. Forecasts should be updated when circumstances change.
- Short-term cash flow
- Current creditor and debtor schedules
- Contingent liabilities and guarantees
- Funding terms and stakeholder support
When to stop
If there is no reasonable and funded route to improvement, the board should consider ceasing trade and obtaining advice on an orderly insolvency process.
Common questions
Does late payment automatically mean insolvency?
No. Insolvency depends on the wider cash flow and balance sheet position, not one isolated late payment.
Can directors use personal funds?
They may choose to provide funding, but the terms, affordability and effect on other creditors should be carefully considered and documented.
This guide is general information only and does not constitute insolvency, legal, tax or financial advice. The position should be reviewed using the company's current facts and documents.