According to the American Bankruptcy Institute, 69 percent of the 61,148 business bankruptcies declared during the 12-month period ending in March 2010 were Chapter 7 liquidations. If one of your customers enters Chapter 7 bankruptcy, there is a good chance your company won’t recover any part of what it is owed.
So what should you do if one of your major customers declares bankruptcy? Mike Periu suggests these five steps in this article, courtesy of the OPEN Forum:
- Step 1: Freeze and evaluate current projects and orders
- Step 2: File a proof of claim
- Step 3: Estimate your actual and future losses and adapt
- Step 4: Analyze your customer concentration and make plans to adjust
- Step 5: Reassure everyone that this won’t put you out of business
If goods have been shipped to the company after they have declared bankruptcy, your company may be able to reclaim them. You can find more information in this article, also by Mike Periu from the OPEN Forum.