Company in administration - debt recovery question

hztm Registered Posts: 50 ? ? ?
Hi, I would be really grateful for advice on the following question - you have just been told that a company that owes you £600 has been placed in administration, what will you do regarding credit control and debt recovery. I would say (1) Ring the client to find out the details (eg is the company trading as normal, etc), (2) Place their account on hold, (3), Send a statement of account to the administrator, (4) Depending on the outcome of (1) consider raising a doubtful debt. Does this sound ok?

I am just revising for the Unit 15 assessment and thank you very much for any info.


  • blobbyh
    blobbyh Registered Posts: 2,415
    About right yes. You need to confirm the details of the administration and if true, provide for the doubtful debt since existing amounts due to you will be ring fenced. Depending on the nature of the insolvent debtors business, it's not a given that you can't continue to trade with them providing that the administrator running the company makes assurances you would be paid for these new supplies, for example, if you supply core materials essential to fulfilling existing orders and thus generating important cash income. If the company did later successfully trade its way out of administration, this could be looked on very favouribly for future trade (though you'd want to keep them on a very short leash).

    In real life, although some can slowly but successfully leave administration, the majority won't and will eventually be liquidated. Either way, you'd need to register as a creditor of the debtor and hope some of the money owed to you would come your way eventually, though this is unlikely in the event of the company being wound up. Since this can sometimes take years, it's more than likely that you'd write off the debt long before then so you can reclaim the output tax.
  • hztm
    hztm Registered Posts: 50 ? ? ?
    Thank you very much indeed for this.
  • stuart-elmes
    stuart-elmes Registered Posts: 6
    Good advice, but if you aren't sure if a company has actually gone into administration, then you might find this new company checking web service useful:

    It checks with Companies House and searches for corporate insolvency notices and gives a summary of whether the business has genuinely gone into administration
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