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We had a situation a few years back when a builder merchants went bankrupt owing us about £3000. Not a massive sum, but enough to cause us a bit of pain. A few months after the dust settled I got a call from the MD who had now set up a new company and was looking for a credit account. I point blank refused to give him credit but not because he had gone bankrupt before. It was because of the way he had handled himself during the bankruptcy. His phone was never turned on, he wouldnt return calls and he didnt inform us of the impending sitiation. We only found out through the liquidators. Businesses going bankrupt is an unfortunate fact of life and I would never hold it against anybody, but I think the way that people handle these difficult situations speaks volumes for there character.
There are also the other businesses who make a habit of going into voluntary liquidation just so they can clear a load of debt. Then they start again with a sligthly different name. For me, this type of behaviour is legal theft.
To answer the original point, we credit check everyone we give credit to. to not credit check companies before giivng credit is bad management and evetually will come back to bite you. Cash flow is king and without it, no business can ooperate for very long.
I would deal with them as long as we were paid in full up front if not then no,
far too many folks go tits up one week and open up the next, never paying anyone back shocking and wrong.
I think the days of shut on a Friday open Monday with a different name are all but gone now.
A friend who does swimming pools went bust about 18mts ago due to none payment, he contacted all is suppliers and as paid them all back now.
Both Simon Cowell and Richard Branson have been bankrupt, would you do work for them at their property given the chance?
Doing pop does not seem to carry any shame now a days, i think the inland revenue is the largest reason for a company to go under
Our builder went under halfway through our house work. Totally up-front, and it was only because he was trying to stall things, in the hope they picked up before he had to lay staff off, that caused it. ALmost all the suppliers took it on the chin, and are dealing with him again now, it's part of the construction business in hard times and I remember the same in the '80s.
In hindsight he'd have done an IVA instead, as that would have been acceptable to the couple of suppliers who did refuse to offer credit to the new company. 10p in the pound or so is, apparently, enough to offer!
I'd never refuse to work for someone who had a bankruptcy behind them if I liked them enough to take a job on, but would be more careful about terms; all materials up-front and never get to a second invoice without the first being paid. But, that's what I do for almost all clients anyway, just seems good practise.
Are there not at least two scenarios here ?
Those that go bankrupt due to 'unforeseen' outside pressures and those that go bankrupt to deceive and exploit suppliers/clients leaving a trail of purposeful debt?
If so, how do you recognise and deal with this...?
Whichever "scenario", money up front. Pro forma invoice. Most upright ex bankrupts wouldn't take offence.
One thing i would like to point out is that some people get into debt through no fault of their own, it happened to me and can happen to anyone, circumstances change suddenly. I had a series of things happen over a year, not one thing was a fault of mine but it was a series of unfortunate events or sheer bad luck and left me and my business in a bad way, i was determined to trade out of the situation, it was tough but have just managed it, so to say 'dont get into debt in the first place' is not necessarily a chosen path.
Paving & Landscape Company Ltd said:
After loosing one business and entering an IVA. ( never do that again) not everyone has control of what happens to them.
I tried in desperation to trade out of it but could not. The worse thing is once people find out your having problems they think they dont have to pay. I closed my doors being owed £130k. Lost my house, nearly lost my family.
Its not the bankrupt or ex bankrupt its the serial bankrupters and commercial customers. Give me a 3 bed house cash payer any time over a multi national, etc.
I was given a list once of people not to trust and to date it has been mostly true. Sorry cant print it on here as its not politically correct. But we could all probably guess.
As said before I have toughened up ask nice twice then the ball starts rolling. Straight to solicitors no messing. All done on line. £2.50 for the first letter. So far I have not had to go further than this.
Mark