Changes your credit control team should make to mitigate the impact of Covid-19
The Covid-19 pandemic is creating a whole host of unprecedented challenges for businesses of all sizes.
Despite the range of government support available to businesses, late payment is likely to increase and eventually corporate insolvencies too, like we’ve seen in previous recessions.
So it is important for businesses to take the necessary action to ensure their credit control processes and procedures are as efficient as possible to ensure timely payment from customers, many of whom may be severely impacted by the pandemic.
Here are 6 changes you can make to help your team keep money coming in over the coming months.
Get to know your customers
Although it’s always a good idea to maintain communication and an overview of your customers, now more than ever it’s worth picking up the phone and finding out what’s going on with their business.
When you have a better idea of who is vulnerable and may need extra help, you’ll be in a better position to not only support other businesses but keep your business safe. If it does look like a customer is going to struggle to pay an invoice on time – or even be about to go under – you’ll be able to act quickly to recover as much of the debt as possible.
Prioritise credit control
When it comes to keeping your cash flow healthy there are different things you can do, but it is important to continue to prioritise debt collection.
With many staff on furlough, and different government schemes in place, it may seem that the simplest option is to seek a business loan to boost your cash flow through this difficult time. However, in some cases the funding offered through a loan may not be sufficient to meet all your needs, or else may not be the best choice for your business in the long run.
Keeping your finger on the pulse when it comes to credit control gives you a better chance of getting paid even if it may take slightly longer and will help you as you move towards getting back on your feet.
- How will coronavirus affect my business getting paid on time?
- 3 ways to support COVID-affected customers (and still reduce late payment)
- How to choose a debt collection agency
Offer more flexibility
It is likely that during these difficult times, you will have customers who are genuinely struggling to pay invoices on time, and it’s important to offer them the flexibility they need.
This may mean deviating from your standard payment terms or being open to alternative payment plans, all of which may provide the customer some short-term relief. Showing that you are willing to be flexible will not only help build your relationships, but also make it more likely that you will receive payment.
Seek professional help
In some cases you may find that you need to seek professional help in order to collect payments. This could be due to communication between you and the client breaking down, repeated missed payments, or simply just an overload of credit control activity that you need help with.
The earlier an agency gets involved the higher the chance of getting paid the full amount, so be prepared to turn to an agency as soon as you notice a need.
Implement new frameworks
Although it may seem like now isn’t the right time to make major changes, getting the basics of your credit control right will make a huge difference as things continue to intensify down the line.
It could be that you want to consider some new procedures that make it easier for you to assess your clients’ financial health, set up some automation or review your paperwork to make sure it’s watertight.
Grow your bad debt provisions
Even when you feel that you are in a strong position, just one bad debt could leave you struggling. So it’s important to have some sort of buffer and protection in place that you can use should you encounter any trouble recovering payments.
In times of uncertainty insolvency can often spark a chain reaction, affecting all businesses in the supply chain. A preventative buffer – such as credit insurance or a non-recourse invoice finance facility – will mean that you’re still able to meet running costs and pay your suppliers on time, stopping the problem escalating.
If you need support with credit control or the recovery of individual invoices, a debt collection agency can step in to act as a mediator, take the strain during times when you may be busier than usual, and recover payment from customers that you feel are dishonest or trying to avoid paying.
Call us on 0800 9774848 or request a call back to discuss your options for debt collection and credit management support.