Company in administration - debt recovery question

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.

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:

http://www.mycreditcontrollers.co.uk/company-check.html

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