One of my biggest customers has gone bust - can I recover the debt I'm owed? #AskAMS

One of my biggest customers has gone bust – owing me a lot of money – can I recover the debt / reclaim the goods?

Sadly, if you are an unsecured creditor (a secured creditor has preferential rights) you may only recover a few pennies in the pound, and usually nothing. 

Here are some, common sense precautions you can take in future:

• Have clear credit control procedures and follow them consistently
• Check credit references before offering credit
• Do not extend credit limits without good reason
• Monitor customer accounts regularly

If a payment period lengthens, act quickly, discuss the matter with the customer and: suggest they take smaller more frequent deliveries; maybe restrict payment periods to, say, 20 days and extend to 30 days when you are confident they will pay; ask for confirmation that both the goods and invoice have been received to avoid the ‘sorry I lost the invoice’ scenario.