It can be challenging enough to make ends meet when you're running a small business, without having to worry about whether or not you're going to get paid for your services or products. While many of your customers will pay on time and not cause you any issues, a few may not. There are of course a variety of reasons why a customer may not be able to pay you and whether this situation is terminal or otherwise. What do you need to know before you decide whether it is worthwhile for you to pursue a debt or not?
Knowing the Depth of the Problem
Some businesses may be naturally slow at paying or may try and push the envelope as far as they can in order to give them a better cash flow. Certainly, in these cases you need to stand up for your rights, and chase the debt as aggressively as possible. However, other times a business is genuinely in difficulty and may be about to crash. When this happens, there are three different ways that a failing company can proceed, and each will present a different option for you when it comes to trying to recover your slice.
Appointing a Receiver
Occasionally, a bank will go through the legal system and appoint what is known as a "receiver" to sell off a company's assets to pay them money owed. This receiver has a specific task, which is to recover the funds for the bank in question, and they won't be interested in helping you with your problem. In this case, however, you can still initiate some legal action to recover your own debts, but you need to act with some haste to ensure that you can mop up some of the assets left after the receiver has finished their work.
Going Into Voluntary Administration
Other times, a failing company will understand that they need to try and assess the situation with some degree of protection and will enter into what is known as "voluntary administration." This brings in an independent administrator who will decide whether the business can be saved or not. This is not necessarily a good idea for you, if you're an unsecured creditor. In this situation, you cannot begin any claim against the company unless you take it through the court and get permission first. You can, however, send all the details of the debt to the administrator, so that they can be aware of what you're owed if any funds become available for settlement.
The final option in this case is "liquidation." The directors of that company will no longer have any control, and an independent person will try and liquidate all its assets to benefit the list of creditors. You need to post your claim before a company declares liquidation and must just sit back and wait for the results of the winding-up to come out.
Don't Just Sit There
The moral is to keep your ear to the ground, and be ready to take action well before a company takes one of these three options listed above. You should work with a debt collection agency to aggressively pursue any debts this way.Share