Guide · updated 28 September 2026

What to do when a customer goes into administration

Finding out a customer has entered administration or liquidation is stressful, especially if they owe you money. Moving quickly and in the right order gives you the best chance of recovering something and protecting your business.

1. Stop supplying on credit

Pause deliveries and work until you understand the position. An administrator may want the business to keep trading and may ask you to continue supplying; if so, agree clear payment terms with the administrator directly rather than adding to the existing debt.

2. Work out what you're owed

List every unpaid invoice, credit notes and any work done but not yet invoiced. Check what your terms of sale say — in particular whether they contain a retention of title clause, which can let you reclaim goods you supplied that haven't been paid for.

3. Contact the insolvency practitioner

The administrator's or liquidator's details are on the company's Companies House record and in its notice in The Gazette. Tell them you are a creditor and, if you have retention of title, say so straight away and ask for your goods to be identified and set aside. Goods that have been sold on or mixed into other products are usually much harder to recover.

4. Submit a proof of debt

You claim by submitting a proof of debt to the insolvency practitioner, usually through a form or online portal they provide. Keep copies of invoices, delivery notes and correspondence as evidence.

5. Be realistic about recovery

Money raised is paid out in a set order: the costs of the process, secured lenders with fixed charges, preferential creditors (including some employee claims and certain taxes owed to HMRC), lenders with floating charges, and then unsecured creditors — which is where most trade suppliers sit. A portion of floating-charge money is ring-fenced for unsecured creditors, but they often receive a small percentage of what they're owed, or nothing. Why secured lenders come first.

6. Recover the VAT

If you've paid VAT on invoices that go unpaid, you may be able to reclaim it through VAT bad debt relief once the debt is more than six months overdue and written off in your accounts. Your accountant can confirm the details.

7. Protect yourself next time

Most insolvencies are preceded by public warning signs — late filing, new charges, directors leaving. Know the signs, make sure your terms of sale include retention of title, and monitor the customers who owe you most so the next warning reaches you while there's still time to act.

This guide is general information, not legal advice. For a significant debt, speak to a solicitor or insolvency adviser early.

Common questions

Will I get paid if a customer goes into administration?

Often only part of what you are owed, and sometimes nothing. Unsecured creditors are paid after the costs of the process and after secured and preferential creditors.

How do I claim what I'm owed?

Submit a proof of debt to the administrator or liquidator, whose details appear on the company's Companies House record and in The Gazette notice.

Can I get my goods back?

Possibly, if your terms include a valid retention of title clause and the goods can be identified. Take advice quickly, before they are sold or used.

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General information, not legal or financial advice.