Originally written by Rebecca Dunne on Small Business
With the risk of increased administrations, it is essential to be aware of steps you can take if you supply a company that is at real risk of going into administration.
Administration is when a company cannot afford to pay its debts, and an insolvency practitioner (IP) is appointed to run the company. The IP takes control over the company’s assets, allowing these to be sold to pay back creditors.
What if you suspect your client is heading into administration?
So, how can I avoid getting stuck in this tricky position?
Know your industry
Keep up to date on the activities of the businesses you engage with and supply. If you can see distressing signs, then you should reconsider your deal. Of course, sometimes you may hear rumours through the grapevine, but you can never be sure – so always gets your facts checked.
Use a credit rating tool
Companies like Experian, Creditsafe and Redflagalert track the financial health of companies. You can set up alerts for your clients so you will be told if there has been a CCJ raised against them or if their recent filed accounts point to problems. If you receive warnings, it would be wise