Not quite sure who is whom in this (and perhaps that's a good thing before this thread gets pulled) BUT
it is illegal to use the excuse "pay when paid". The supplier has a statutory right to charge interest now. If a company does not have the cash to pay it's debts then it is trading illegally and can be wound up.
A Winding-Up petition (under Insolvency Act 1986 - can't remember the section number after a couple of glasses of merlot) can be made to the Courts where a debt (or total of debts) is greater than £800. This means, that unless the Limited Company can demonstrate that it can pay it's debts and has another dispute with the supplier, then the court can deem the company to be trading illegally and issue a Compulsory Winding-Up Order. Basically, the company will be liquidated.
Whoever wrote the latter part of the e-mail is treading on very dodgy ground. It is not the supplier's problem that there is no cash. The debtor should seek further overdraft funds from the bank or the directors/shareholders should put more capital into the company to raise funds (issue of shares/debentures/long term loans) or seek to find further investors.
Of course, this would require a sound business plan and if overdrafts have already been increased, then a bank might be reluctant to extend.
If the second correspondent has any issue with what I've written, please feel free to PM me.
Cheers
Whirls (ACA!)