Why a customer in insolvency immediately affects your SME
In typical B2B relationships of a Swiss SME — supply of goods, services, licence fees or maintenance — the customer's bankruptcy or over-indebtedness (Art. 191 CO) is not just a collection delay: it opens proceedings governed by the Federal Act on Debt Enforcement and Bankruptcy (LEF, RS 281.1; German: SchKG), which sets mandatory deadlines, limits individual enforcement actions, and requires immediate decisions on ongoing deliveries and receivables already due.
From an accounting and risk-management perspective, the event must be distinguished from simple default: publication of bankruptcy or opening of a moratorium signals that the debtor's assets are subject to collective insolvency administration. For your company, this means verifying whether the claim is admissible, filing for admission to the claims register within the deadlines, assessing whether to suspend further performance, and adjusting receivable valuations in the financial statements under Swiss accounting standards (FER / Swiss GAAP FER).
This guide outlines the practical path for business owners and finance managers who use tools such as Accountex to keep receivables, deadlines, and year-end close under control, without replacing advice from a lawyer or trustee in complex cases (security interests, set-off, corporate groups).
Insolvency proceedings: what the debt enforcement office announces
Before acting on invoices and contracts, identify which proceeding has been opened: the consequences for suspending performance and for writing down receivables differ.
| Proceeding | Main effect for the creditor | SME operational note |
|---|---|---|
| Bankruptcy (liquidation) | Collective insolvency administration; activity usually ceases; distribution of proceeds | Stop deliveries except in limited cases; claims to be filed in the register; write-down often required |
| Moratorium | Suspension of individual enforcement actions; restructuring plan possible | Assess whether to continue supplies (risk of further exposure); monitor communications from the moratorium administration |
| Composition agreement (preventive or post-bankruptcy) | Binding proposal if approved by creditor classes and the court | Partial collection possible; record agreements and adjust remaining valuation |
| Real estate / movable property enforcement (not bankruptcy) | Targeted recovery on specific assets; no automatic insolvency claims register | Distinct from bankruptcy; deadlines and priorities under the LEF |
The official notice (publication in the Swiss Official Gazette of Commerce or notification from the bankruptcy office) is presumed to put creditors on notice of the bankruptcy: from that point, deadlines for filing claims in the register generally start to run, and the case for suspending performance still owed by the creditor to the bankrupt debtor is strengthened.
Admission to the claims register: deadlines, proof, and claim classes
The insolvency liabilities list admitted claims that participate in the distribution. Failing to file on time or submitting an incomplete application can exclude you from distribution or reduce voting rights in a composition agreement; late filings remain admissible in certain cases under the LEF (Art. 251), with additional burdens.
Deadline and form
In the bankruptcy publication, the bankruptcy office states the deadline for filing a claim in the register (as a rule one month from publication, Art. 232 para. 2 no. 2 LEF). Claims arising before bankruptcy opening are generally admissible; watch invoices issued after opening (estate liabilities or ordinary insolvency claims, with different treatment).
The application must be supported by written proof of the claim (invoices, contracts, account statements, any acknowledgements of debt) and state the amount, including default interest if admissible and not already paid.
Types relevant for B2B
- Ordinary unsecured claims (supplies and services)
- Privileged claims (e.g. certain wage and lease claims, within legal limits)
- Claims secured by pledge or real security (partial separation from the estate)
- Set-off (Art. 213 LEF) where mutual debts exist, generally with a cause predating bankruptcy opening
Disputes and provisional ranking
The bankruptcy administration prepares a provisional ranking of claims (Art. 247 ff. LEF). If your claim is disputed or only partially admitted, you may challenge it within the stated deadline (Art. 250 LEF). Keep in Accountex (or your ERP) the documentary trail: order, confirmation, delivery notes, timesheets, VAT consideration — decisive elements if verified.
VAT: under the standard agreed consideration method, VAT on issued invoices remains due in principle even if payment is not received; if the debtor is insolvent, consider adjustments via reversal of the tax credit and the annual correction return (Art. 72 VAT Act), or the rules applicable if you use the collected consideration method. Coordinate with your tax adviser or the Federal Tax Administration to avoid double economic and tax loss.
Suspension of performance and ongoing contracts
The customer's bankruptcy does not automatically terminate every contract, but contract law (CO) allows you, where there is material breach or equivalent situations, to suspend your own performance (exception of non-performance) and, where conditions are met, to terminate the contract. After bankruptcy opens, continuing to deliver goods or provide services without advance payment or security increases exposure: unpaid performance may qualify as ordinary insolvency claims (often modest recovery); if the administration adopts or completes the contract for the benefit of the estate, the supplier's claim may qualify as an estate liability (Masseschulden, Art. 262 LEF), with priority over unsecured claims.
For term contracts (SaaS, maintenance, leasing), check insolvency termination clauses, notice periods, and amounts already accrued. The trustee may request performance if it benefits the estate (concursus obligations); assess case by case with legal support, especially if the contract is essential to the customer's continuity or exit penalties apply.
| Situation | Prudent action |
|---|---|
| Open order, goods not shipped | Suspend shipment; verify retention of title (if validly agreed and effective) |
| Recurring service | Notify suspension in writing; invoice only for periods already delivered; do not build new receivables |
| Debt owed to the bankrupt party (supplier and customer) | Analyse set-off (Art. 213 LEF); avoid paying the debtor after bankruptcy — pay the trustee if owed to the estate |
| Bank guarantee / aval | Enforce within guarantee deadlines; distinct from ordinary insolvency claims register |
Receivables and financial statements: valuation, write-down, and disclosure
Under Swiss GAAP FER (SMEs), trade receivables are current assets measured at nominal value, with value adjustments where partial losses are probable. Formal insolvency of a debtor is a strong indicator that often justifies — or requires — a write-down (Wertberichtigung) or, in extreme cases, write-off of unrecoverable receivables.
Typical booking
Keep gross receivables on the customer account until definitively settled or cancelled; record the allowance on a value adjustment account (allowance for doubtful accounts) with offset to bad debt expense or similar.
On receipt of insolvency dividends (Acquittierung), apply collections first to the allowance, then to the remaining receivable; treat any difference as insolvency gain or further loss.
Recovery estimate
Without security, many B2B liquidations close with modest distribution rates. Document the assumption (recovery percentage, trustee's view, sector history) for audit and review.
For consolidated statements or companies subject to ordinary audit, note disclosures (significant debtor, events after the balance sheet date) must be consistent with the proceeding in progress.
Impact on management metrics
Beyond the balance sheet, update the customer aging report, DSO, and cash flow forecasts. A single customer in insolvency can breach internal covenants or concentration risk thresholds: segment by counterparty and tighten credit limits on other related debtors (same group, same guarantor).
Operational workflow in eight steps
- Verify official source — Bankruptcy or moratorium in the SOGC / communication from the trustee at the competent debt enforcement office (debtor's canton of domicile).
- Block new exposure — Hold on orders, SaaS access, or shipments; inform sales and operations.
- Reconcile open receivables — Customer statement in Accountex aligned with invoices, credit notes, and partial pre-bankruptcy payments.
- Prepare claims register filing — PDF attachments, total in CHF, interest and contract references; meet the mandatory deadline in the publication (as a rule one month, Art. 232 LEF).
- Assess set-off and security — Amounts owed to the customer, pledges, retentions; involve legal counsel if amounts are material.
- Record write-down — At month-end or immediately if material; track reversals if the composition improves.
- Monitor distributions — Record insolvency receipts with date and trustee reference; close the account when the receivable is settled.
- Lesson for credit management — Update scoring, credit insurance, or guarantees required for high-risk customers.
Common mistakes to avoid
Collecting after bankruptcy without verification. Payments received directly from the bankrupt debtor may have to be returned to the estate; collect via the trustee or after clarification.
Missing the claims register deadline. Without timely filing you are excluded from distributions already made; late applications remain possible until bankruptcy closes (Art. 251 LEF), but with costs and no entitlement to instalments already paid out.
Continuing to invoice as if nothing happened. You accumulate hard-to-recover insolvency claims and distort sales statistics.
No write-down or a late one. Exposes you to audit criticism and misleading profit; align accounting with the insolvency situation.
Summary for business owners and trust firms
A B2B customer in Swiss insolvency proceedings demands a fast response: procedural protection through admission to the claims register, operational protection by suspending performance not yet paid or secured, and balance-sheet protection through correct receivable write-downs. The LEF and the CO provide the framework; day-to-day execution depends on clear internal procedures and reliable accounting data.
Integrating in Accountex alerts on claims register deadlines, master-data notes on the debtor in insolvency, and documents attached to the customer account reduces the risk of costly oversights and eases dialogue with auditors and legal advisers — leaving your company room to focus on solvent customers and a credit policy aligned with Swiss SME reality.