If a customer goes bust, it can be frustrating and confusing not knowing where you stand.
You are left with outstanding bills and wondering if you will get paid. While you wait to find out if your debt is going to be cleared, your cash flow suffers.
In Australia, company insolvencies can take a number of forms but are essentially defined as a company's inability to pay all their debts as and when they fall due. On average 24,000 individuals and 10,000 businesses become insolvent each year, although according to ASIC, approximately 50 per cent are avoidable.
In order to understand where you sit if a customer goes bust, it is worthwhile understanding a little bit about each type of insolvency with the help of your accountant. If you know what type of insolvency your customer is under, you will better understand your rights and what steps to take to recover your money. There are four types: Read more…