Key Facts

Individuals are adjudged bankrupt or into individual voluntary arrangements (IVA) or if a partner in a business possibly into a partnership voluntary arrangement.

Companies go into liquidation or administration and company voluntary arrangements (CVA).

All are different and work in different ways

Number One

Check you are on the list of creditors and does the debt amount match your records? Check the type of insolvency and the date of appointment. if it is a trading administration you need to set up a new customer account and make sure ALL future orders are approved by the notified authorised signatories. You can still trade with companies in administration and CVA’s.

Number Two

ALWAYS complete the statement of claim form or the proof of debt form in the paperwork received just in case a dividend is ever declared. In the well known words of the lottery “You Have to Be in it to Win It“! No lodged claim = no dividend.

If you don’t know how ask ICM we will help you. There is a small fee

Number Three

Run your eye through the debtors list and creditors lists, are any of your competitors on the lists? What about your customers? If they have also incurred a bad debt it could affect their cash flow and their ability to pay.

Number Four

Read the key parts of the report, a lot of things are available through online login portals now, so do use your vote. By trying to understand why your customer failed it may help you within your business. If you stand to lose a large amount then you can ask ICM to assist and help you understand the key points. These include dividend prospects, the terms of a CVA, administration, or liquidation.

Number Five

Record it in your accounts, check with your accountant to see if you are eligible for VAT Bad Debt Relief. Inform your insurers if you have credit protection, pull everything together to start your claim for a pay out.

Number Six

Analyse how much of your turnover sits in the debt, if you do not have credit protection and it is going to impact your business hard, then don’t delay in asking for help. Asking for help could save your business.

If you have other overdue customers whose early payment would ease the impact for you if they paid up to date, consider referring them. By doing this you could adsorb the bad debt easier.