As a business owner, you always hope your customers will be financially stable and able to pay. Unfortunately, some customers will end up filing for bankruptcy. This can be a stressful time, especially if it was one of your more important customers. You may be asking yourself “What do I do now?” or “How do I prevent this situation from getting worse?” Here are six steps to take when you are notified that a customer filed for bankruptcy.
1. Arrange for all goods in transit to not be delivered
Depending on how you deliver your product and conduct business this could be as simple as an email or it could involve a more complicated process.
2. Make sure all future shipments are canceled
Again this could be easier said than done, depending on your arrangements.
3. Check to see if you can submit a reclamation notice on already delivered products
4. Determine how much the customer owes and collect all financial documentation to support this claim.
You should begin organizing all financial documents related to this customer in order to be able to provide sound financial proof of the debt owed to your company.
5. File a proof of claim with the bankruptcy court.
There are many important things to note about this. Make sure you include the required supporting documentation with your claim. Make sure you send the proof of claim by registered mail, with a return receipt requested. You should contact the court to make sure the documents were received after an appropriate amount of time. It is always a good idea to keep duplicate copies of all documents in a secure place in case the court misplaces the originals
Bankruptcy can be a pain to deal with but if you are proactive you can save yourself time and money later down the line. It may seem confusing at first, but the situation will only get worse the longer you wait to deal with it. As always, if you have any questions or concerns contact a lawyer.