Customer in Administration: How to Recover Unpaid Invoices (UK 2026)

Market Invoice is an independent UK invoice finance comparison site that ranks 85 active UK lenders.

If a UK customer enters administration with unpaid invoices owed to you, stop all credit immediately, register as an unsecured creditor with the administrator within the deadline (typically 21 days from the first creditors' notice), and submit your proof of debt with copies of invoices, statements and any contracts. Most unsecured trade creditors recover between 0p and 30p in the pound, paid 12 to 36 months after appointment. If you sold the invoice to a non-recourse spot factoring provider before the administration filing date, the factor absorbs the loss and you keep the cash. If you held trade credit insurance, you can claim up to 90 percent of the invoice value within 90 days. Without either of those protections, plan for the worst.

Last updated: 8 May 2026.

If a UK customer enters administration with unpaid invoices owed to you, stop all credit immediately, register as an unsecured creditor with the administrator within the deadline (typically 21 days from the first creditors' notice), and submit your proof of debt with copies of invoices, statements and any contracts. More detail + scope

Summary

If a UK customer enters administration with unpaid invoices owed to you, stop all credit immediately, register as an unsecured creditor with the administrator within the deadline (typically 21 days from the first creditors' notice), and submit your proof of debt with copies of invoices, statements and any contracts.

Most unsecured trade creditors recover between 0p and 30p in the pound, paid 12 to 36 months after appointment. If you sold the invoice to a non-recourse spot factoring provider before the administration filing date, the factor absorbs the loss and you keep the cash.

If you held trade credit insurance, you can claim up to 90 percent of the invoice value within 90 days. Without either of those protections, plan for the worst.

This page covers

customer in administration UK: what to do as an unpaid supplier, recovery rates, trade credit insurance, non-recourse factoring protection

Not covered here

General invoice finance education (see /guides/), individual provider reviews (see /providers/), full pricing breakdown (see /guides/costs/)

UK providers worth knowing

ProviderFee fromMin turnoverWhy it fits
HydrVariableNo minNon-recourse spot factoring on credit-approved debtors
Skipton Business Finance0.5%+£100kBad debt protection module on whole-book facilities
Bibby Financial Services0.5%+£100kOptional credit insurance bundle covering up to 90% of bad debt
Aldermore0.7%+£250kBad debt protection on confidential discounting facilities
AP

Adam Parker

Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd

Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.

Last reviewed: 16 July 2026

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Customer in Administration UK FAQ

What happens to my unpaid invoice if my customer goes into administration?

It becomes an unsecured debt against the estate. You register with the appointed administrator as an unsecured creditor and submit a proof of debt. Distributions to unsecured creditors are paid after secured creditors (banks with debentures), preferential creditors (HMRC for PAYE/NIC up to 12 months), and administration costs. Typical recovery is 0-30p in the pound, paid 12-36 months later.

How quickly do I need to act when a customer enters administration?

Within hours. (1) Stop all further credit and pause any work-in-progress. (2) Identify any goods supplied with retention of title and email the administrator within 14 days to claim them back. (3) Check the first creditors' notice for the proof of debt deadline (usually 21 days). (4) If you have trade credit insurance, notify the insurer within their notification window (often 30 days). (5) Search Companies House for the administrator's name and contact details.

Can I claim VAT back on an unpaid invoice from a customer in administration?

Yes. Under HMRC's bad debt relief, you can claim VAT back on the unpaid portion 6 months after the invoice due date. You don't have to wait for the administration to conclude. Claim via your VAT return (box 4). Keep evidence of the unpaid debt. If you later receive a partial distribution from the administrator, you must repay the corresponding VAT.

Does invoice finance protect me if my customer goes into administration?

Only if you sold the specific invoice to a non-recourse provider before the administration filing date. Non-recourse spot factoring (Hydr, Kriya for credit-approved debtors) means the factor absorbs the loss. With recourse factoring (Bibby standard, most whole-book), the factor will demand the cash back from you. With invoice discounting, you remain on the hook for the full debt. Always confirm whether your facility is recourse or non-recourse.

Is trade credit insurance worth it for unpaid invoice protection?

Yes for businesses with concentrated debtor risk (one customer over 20% of turnover) or sectors with high failure rates (construction, retail, hospitality). Premium typically 0.1% to 0.4% of insured turnover. Major UK underwriters: Atradius, Allianz Trade (formerly Euler Hermes), Coface, Tokio Marine HCC, Nexus. Pays out 70-90% of insured value within 60-90 days of customer insolvency. Many invoice finance providers bundle credit insurance into their facility.

What if my customer enters CVA instead of administration?

A Company Voluntary Arrangement (CVA) is a binding repayment plan agreed with creditors. You'll receive a CVA proposal document setting out what unsecured creditors will be paid (typically 25-40p in the pound over 3-5 years) and asked to vote. The CVA passes if 75% by value of voting creditors approve.

Once approved, you cannot pursue the original debt and must accept the CVA terms. If you suspect the CVA understates assets or favours connected creditors, raise it with the supervisor before the vote.