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Overview
Your account enters arrears when repayments fall significantly behind schedule. This typically happens after multiple failed Direct Debit collections or prolonged periods of zero sales without prior communication with SAPI. This guide explains what arrears status means, the consequences, the collections process, and the steps you must take to resolve it.
What are Arrears?
Arrears means that you are currently behind on your repayment obligations for the payment-linked advance.
How Arrears Status is Determined
For payment-linked financing, the determination of arrears is more flexible than with a traditional loan (which has fixed monthly due dates). Your account generally enters arrears when:
Failed Collections: This occurs if the monthly Direct Debit collection (designed to cover the Minimum Monthly Payment shortfall) fails.
Prolonged Zero Sales or Lack of Engagement: You experience an extended period of zero card sales without contacting SAPI to explain the situation or arrange an alternative repayment plan. Arrears may also be triggered if you avoid, ignore, or mislead the SAPI team when contacted regarding your account status.
Breach of Arrangement: You fail to meet the agreed-upon terms of a negotiated forbearance or repayment plan.
Significantly Exceeding Timeline: If low collections cause your estimated repayment timeline (e.g., 12 months) to drastically extend (e.g., 15+ months), SAPI may classify the account as being in arrears.
Consequences of Entering Arrears
1. Credit Impact
Arrears status is a severe indicator of repayment difficulty and can affect your ability to secure future financing.
Business Credit: Arrears may be reported to business credit reference agencies (such as Creditsafe, Experian Business, or Dun & Bradstreet), negatively impacting future business lending applications.
Personal Credit: If you provided a personal guarantee (common for Limited Company directors), arrears may also be reported to personal credit bureaus (Experian, Equifax, TransUnion), affecting your personal credit score.
2. Legal Consequences (Substantial Costs)
If arrears remain unresolved, the case may be potentially escalated to a third-party collections agency, and formal legal proceedings will commence. This will incur substantial further costs for the services rendered by the legal firm.
How to Resolve Arrears
Pay Outstanding Collections Immediately
If you can afford it, pay all missed collections immediately:
Contact [email protected] or +44 7441 352 307 for the exact amount due.
Make the bank transfer as instructed and provide payment confirmation.
Request immediate arrears status removal once payment is confirmed.
If you cannot pay the outstanding arrears immediately:
Contact the Collections team via [email protected] or +44 7441 352 307. We will discuss your current financial position and work with you to find a viable repayment plan.
Preventing Arrears
The best way to manage arrears is to avoid them entirely through early action:
Communicate Early: At the very first sign of trouble, contact SAPI immediately
Maintain an Adequate Bank Balance: Keep sufficient funds in your collection account to cover the collection amount.
Monitor Sales and Collections: Stay aware of upcoming collection amounts based on recent sales.
Prioritise SAPI Collections: Ensure SAPI collections are paid before discretionary expenses. While collections adjust with sales, avoiding failed Direct Debits is critical.
Respond to All SAPI Contact: Never ignore calls, emails, or letters from SAPI's collections team. Engagement shows a willingness to resolve the issue and opens negotiation options.
Your Rights and Protections
Even when an account is in arrears, you still have rights:
Right to be Treated Fairly: SAPI is committed to treating all customers fairly, especially those experiencing financial difficulty.
Right to Complain: You can raise a complaint about collection practices at any time. (Refer to the How to Make a Complaint article for procedure.)
Debt Charity Support: Free, independent advice is available from Business Debtline (0800 197 6026) and Citizens Advice Bureau.
Protection from Harassment: Collection activities must comply with UK law. Excessive, threatening, or harassing contact is illegal. Report any violations to SAPI's compliance team at [email protected].
Frequently Asked Questions
Q: Can I get a top-up while in arrears?
A: No. You must fully clear arrears, return to standard repayment terms, and maintain a good payment history for at least 3 months before qualifying for additional funding.
Q: Will arrears affect my personal credit if I'm a limited company director?
A: For limited companies, this happens only if the directors provided a personal guarantee when the advance was taken out. Arrears on business accounts are primarily reported to business credit agencies.
Q: Can SAPI take my personal assets if my business is in arrears?
A: For limited companies, only if directors provide personal guarantees.
Q: What if I can't afford any collections because my business has zero sales?
A: Contact SAPI immediately at +44 7441 352 307. If you are experiencing poor trading, getting in touch with us as soon as possible allows us to work on a solution with you.
Q: Can I change my bank account if I'm already in arrears?
A: Yes, you can change the account, but you will still need to clear your arrears. Contact SAPI to coordinate both the account change and the arrears resolution plan. Refer to Changing Your Direct Debit Details for more information.
Need Help?
Email: [email protected]
Phone: +44 7441 352 307
External support:
- Business Debtline: 0800 197 6026
- Citizens Advice Bureau: citizensadvice.org.uk
- Find an insolvency practitioner: gov.uk/find-an-insolvency-practitioner