Companies big and small have all felt the impact of COVID-19 in different ways, but one area that has been highlighted for many is the importance of making sure you are on top of managing your cash flow and in particular chasing debts. Debt recovery needs to be an area that you maximise on and follow through with to help you protect the future of your company. It is no stretch to say that many of your creditors will be struggling financially, leaving them with no option to pay their debts to your company or anyone else.
The repercussions of COVID-19 on any part of the business ecosystems of your customers could cause them to:
The customers you have now, will likely be customers post-crisis so it is important to keep people on side, while maintaining the financial health of your business. Here are some tips for making sure you get paid for your precious goods and services whilst the situation persists.
Know your customers
There will always be some customers that try to delay paying you and you will learn over time who they are. Use that knowledge to focus on them to remove all barriers and excuses for paying you late. Learn who to speak to in order to get payments made. Speak to them to check they’ve received your invoice and they are in agreement with the amounts owed.
Open and maintain an ongoing dialogue
Communication is key and working together will help parties find potential solutions that enable business continuity for both sides in the future. The biggest problem with communication is the illusion that it's taken place, this is a great saying by Mark Twain. You should try to avoid alarming debtors when contacting them, as this risks a breakdown in communications. You should also make sure to have up to date contact details – i.e., email addresses and telephone numbers – to ensure efforts to communicate information do not go awry. Communication will also enable you to assess which debtors are genuinely facing financial distress and those who may simply be refusing to pay.
Agree payment arrangements
If appropriate, you can look to agree payment arrangements with debtors. This should be closely monitored, however, as circumstances may change, and a different approach might be more beneficial for both sides if the arrangements no longer reflect a debtors' ability to pay.
Offer payment methods that are easy for your customer to pay
You should make the payment process as frictionless as possible. You should take into account that your customers may lack staff dedicated to accounts payable or that their staff may work remotely through the outbreak.
If you need any advice in relation to any of the points above, please contact me.