What is a Company Strike Off?
As a creditor, there are two reasons why you should be interested in companies on the strike off list.
The first is that if a company that has applied to strike off owes you money, you need to know about the attempt to dissolve the company so you can object and claim on your debts.
The second reason is that sometimes a company will receive a compulsory strike off notice when it fails to file its accounts with Companies House in time. This is a problem that can point to deeper financial problems.
These issues may require you to take steps to protect your company from the potential of bad debt in the future.
What Does It Mean When Your Customer Is on the Strike Off List?
When a strike off is implemented, the company no longer legally exists. It will cease to trade and all its assets, if it has any at the time of dissolution, will be given to the Crown.
If one of your customers has received a strike off notice, it is a good idea to take steps to clarify the company’s position and, if you think there is a chance the company will struggle to pay you, take steps to protect yourself. For example:
Agreeing more favourable payment terms: either receiving the money up-front or shortening payment time, reducing the amount a company owes you at any one time. Including a Retention of Title clause in your contracts will help you repossess any unpaid for goods should a company become insolvent.
Where appropriate, you can cut your losses and stop doing business with the other company. AN ICSM Alert Protects You From Bad Debt While the above steps are useful ways to protect your business from a failing customer, they are only effective if you know about the customer’s problems in advance.
When a strike off is happening you need to know about it straight away, because if you leave it and the strike off goes ahead it will be difficult to recover any debts you are owed.