Your customer has gone into administration. Three ways to cover the cash gap, ranked by speed
What to do when a customer has gone into administration owing you money: the first-day steps, why invoice finance will not fund that invoice, and three ways to cover the gap.
Reading time6 min read
CategoryBusiness guides
Written byThe bizbritain team
If a customer has gone into administration owing you money, work in this order. Confirm the appointment, stop supplying on credit and register your claim with the administrator. Then cover the cash gap from somewhere else. Unsecured suppliers often wait many months and get back very little.
Section 01
What should you do when a customer has gone into administration?
Administration is a legal process. An insolvency practitioner, called the administrator, takes control of the company from its directors.
It also freezes most action against the company. You cannot take it to court for the debt unless the administrator or a court agrees.
So the first day is about facts, not chasing. These are the five things to do.
Check it is official
Look the company up on Companies House. The insolvency tab shows the administrator's name and firm. The Gazette also publishes the appointment notice.
Stop supplying on credit
If the administrator wants you to keep supplying, ask for payment up front. Get the terms in writing.
Add up what you are owed
List every unpaid invoice, with dates and proof of delivery. Include work you have done but not yet billed.
Register your claim
Send the administrator your details and the amount. They will ask you to fill in a form called a proof of debt.
Check your terms for retention of title
Some contracts say the goods stay yours until they are paid for. If yours does, tell the administrator in writing straight away. Ask to identify your stock.
The administrator has up to eight weeks to send creditors their proposals. That document tells you what they plan to do and what creditors might get back.
Section 02
How much do suppliers usually get back?
Often very little. The money raised is paid out in a set order.
The costs of the administration come first. Lenders with security and certain preferential debts, such as some staff pay and some tax, also rank ahead of you. Ordinary suppliers are unsecured creditors and sit near the back.
BrewDog is this year's clearest example. According to the BBC, almost 500 firms were owed about £20m when the brewer collapsed in March. They ranged from coffee shops and bakeries to laundry services.
On 18 September 2026 the BBC reported the administrators' latest update. Unsecured creditors are owed around £190m in total. They are expected to receive less than a penny in the pound.
Administrations are also becoming more common. These are the Insolvency Service's figures for England and Wales, published on 18 September 2026.
182companies entered administration in August 2026.
44%more administrations than in July 2026.
60%more administrations than in August 2025.
1 in 200companies entered insolvency in the last 12 months.
One caveat matters here. According to the Insolvency Service, the rise was driven by more than 250 connected property companies entering administration since March. Total company insolvencies were 3% lower than a year earlier.
The lesson is the same either way. Plan as if the money is not coming back. Anything you do recover later is a bonus.
Section 03
Why invoice finance will not fund that invoice
Invoice finance lets you borrow against invoices your customers have not paid yet. The provider advances most of the value, then collects when the customer pays.
That only works when the customer is able to pay. In our experience, invoice finance providers will not advance money against an invoice owed by a company in administration.
Do you already have an invoice finance facility? Then call your provider today. If they advanced money against that invoice, they may ask for it back. It depends on whether your agreement includes bad debt protection.
The debt is stuck. Your own bills are not. These are the three finance options we see suppliers use, with the quickest first.
Fastest
Invoice finance on your other customers
The bad invoice cannot be funded, but your good ones can. A provider looks mainly at the customers who owe you money, so a decision can come quickly.
It suits a business that sells to other businesses on 30 to 90 day terms.
Next
A short-term working capital loan
This is a lump sum repaid over months, not years. The lender looks at your bank statements and recent trading.
Expect to be asked about the lost customer. Show how much of your turnover they were, and what replaces it.
Slowest
A longer-term growth loan
This takes longest because the lender will want accounts and a forecast. It costs less each month because the repayments are spread over years.
It suits a business that needs time to replace the lost sales.
Is this one bad debt, or a hole in next year's sales?
All three depend on your own business being sound. A lender will want to see that the rest of your customers are paying.
Section 05
One bad customer, or a longer problem?
This is the decision that picks the right option.
Was the failed customer a small part of your sales? Then you have a one-off gap. Short-term funding usually fits, and you clear it as your other invoices are paid.
Was it one of your biggest customers? Then the gap will last longer than one invoice. You need funding that gives you time to win new work. Our guide on relying on one big customer covers how to spread that risk.
This is where a broker helps. We look at what you are owed, what you owe and how you trade. Then we match you to lenders that fit. You can see how business growth financing works with bizbritain, and what lenders usually ask for.
There is one more thing to put in the diary. If you paid VAT to HMRC on the unpaid invoice, you can claim it back as bad debt relief. The debt must be more than six months overdue and written off in your accounts. Your accountant can handle the claim.
This guide is general information, not financial advice. Applications are subject to status, affordability and lender criteria.
Got a question the guide didn’t answer? Talk to an advisor.
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