Your client goes bankrupt. What now?
What if your client files for bankruptcy? In these harsh corona times, the question is more pertinent than ever. How do you ensure that you do not fall victim to a client who goes out of business in these circumstances? How do you avoid unpaid invoices in your accounting?
How hard the corona crisis will hit our economy and how many companies will close down cannot be definitely calculated yet. The various protective measures launched by the government have had a delaying effect on the real impact. For example, in 2020 ‘only’ 7.935 companies went bankrupt. That is almost 22 percent less than the year before and the lowest number in the last ten years. But it is clear that the final blow will be hard. Currently, average economic activity is still 7 percent lower than normal. The Federation of Enterprises in Belgium (VBO-FEB) warns that 2021 will be a transition year. The Belgian economy is not expected to return to normal levels until mid-2022.
The most affected are the logistics sector, trade, the hospitality industry, the travel and events sector and the construction industry. A study by the NBB shows that one in five companies already ran into liquidity problems before the second corona wave started.
Prevention is the best defense
No shortage of ominous messages, but what does that mean for you? Regardless of the drama that happens to other companies, beware of the domino effect and an avalanche of unpaid invoices. As a supplier of goods or services, you run the risk of entering a financial danger zone if invoices remain unpaid due to bankruptcy. Therefore, act preventively as much as possible.
- Do not hesitate to ask for an advance for later orders or deliveries.
- Agree on the shortest possible payment term.
- Follow up unpaid invoices quickly and correctly.
- Ask a third part for help on time to take care of uncontested B2B invoices.
That last point – getting help from a partner like Go Solid in time – is not only important for the financial health and working capital of you company. It also ensures that you can keep the focus on your own core activities. Go Solid ensures that you can recover 100 percent of the invoice amount quickly and free of charge without the intervention of the court.
The curator is in control
All preventive measures reduce your risk of non-payment, but of course do not prevent your client from filing for bankruptcy. What about your outstanding invoices? You were a creditor from the moment you sent the invoice. What is changing is that the rest of the affairs is in the hands of a curator. He will inform you of the bankruptcy of your client and ask you to declare your claim.
You can declare your outstanding debts at RegSol, the Central Register of Solvency. In principle you have 30 days for this. Keep in mind that banks, employees, NSSO and tax authorities are privileged creditors. Be sure to check whether you also have priority over other creditors, for example, if you have a lien or mortgage. Afterwards you will be in the proverbial row, together with other creditors and everything depends on what the curator can recover. The chance is much smaller that you will see your outstanding invoice paid.
Can’t recover the amount? Then the curator can provide you with a tax certificate, so that you can at least write off the invoice amount. You can recover the VAT transferred by submitting this certificate or a copy of the declaration of bankruptcy to the VAT administration.
Consider the financial health of your business and collect your invoices on time. Call on Go Solid to collect unpaid and undisputed B2B invoices faster and cheaper.