How will coronavirus affect my business getting paid on time?
As the country braces itself for the full impact of the coronavirus outbreak, businesses are taking steps to minimise the effect on their ability to continue trading and protect their all-important cash flow.
Unfortunately, and from our experience of recovering invoices from customers during uncertain and challenging times, this inevitably means that many companies, in a bid to protect their own cash flow, will choose to withhold payment to suppliers beyond the dates their invoices fall due.
And as staff are off sick, self-isolating or working remotely, businesses may find it more difficult to reach accounts departments and those responsible for paying invoices.
Naturally this will have a significant impact on supply chains across the country and could create cash flow challenges for the worst affected companies.
So what can businesses do to prevent this from happening, where possible, and minimise the impact it may have?
1. Contact overdue accounts immediately
If any of your invoices are currently overdue, be sure to contact customers as soon as practically possible to find out when they expect payment to be made.
At the very least this exercise will remind your customers of their obligation to pay and the impact that not doing so may have on your business. It will also help to identify potential problem cases that may need escalating or further attention.
2. Make courtesy calls sooner rather than later
If your business has invoices which are approaching their due date, contact your customers by telephone to check the status of the payment and confirm that it will be made on time.
Again, this will serve to remind your customer that the invoice is due, identify any potential delays and, in the event you can’t get through to the right person, get the ball rolling in terms of reaching whoever might be covering for them should they be unwell or in self-isolation.
3. Keep cash flow forecasts updated
Be sure to use the information gathered from these two steps to update your cash flow forecasts.
By understanding what money is coming in and going out of your business, it becomes much easier to identify any upcoming cash flow shortfalls and take steps to address them so the business can continue trading and delivering its goods and services to customers.
4. Seek funding support where necessary
The good news is that lenders are taking steps to support businesses affected by the outbreak.
While some are waiving arrangement and review fees on overdrafts and invoice finance facilities, for instance, the government has also announced a new Coronavirus Business Interruption Loan Scheme to facilitate lending to those most impacted.
Contact our sister company, Hilton-Baird Financial Solutions, to discuss any funding requirements you may have. As a commercial finance broker they can quickly identify the most suitable facility for your requirements and work with you to get it up and running.
5. Consider who you’re selling to
While business goes on, just be mindful of any new orders you receive. What impact will fulfilling them have on your business and cash flow, and crucially how much do you know about potential customers’ ability to pay?
With cash flow stretched it can be tempting to accept all new orders, but be sure not to do this without gaining the necessary information beforehand about the business, key contact details and their credit history.
It may also be prudent to ask what measures they have in place to ensure payment will be made in the event conditions worsen significantly and their business is disrupted.
Ongoing credit checking of existing customers is also advised, particularly as credit ratings may change fairly quickly. Having an up-to-date view of your customer base will allow you to be aware of any potential issues and enable you to act accordingly.
6. Act quickly when payment isn’t forthcoming
If you have exhausted your internal efforts to recover an overdue invoice, you’re being met with delay tactics or you’re unable to get through to the customer, it’s important that you take action quickly.
The likelihood of recovering payment is significantly higher the earlier a debt collection agency is instructed, so don’t delay when payment isn’t looking likely or you’re concerned about the impact it might have on your business.
Unfortunately, the pandemic is likely to cause the failure of a number of businesses – particularly in the most affected sectors such as travel, tourism, leisure and hospitality.
By instructing a debt collection agency early, you’ll dramatically increase the chances of getting paid, reduce the risk of bad debt and give yourself more time to focus on minimising the impact of coronavirus on the rest of your business.
Call our collections experts on 0800 9774848 to discuss any overdue accounts you’re concerned about, or get an instant debt collection quote.
At Hilton-Baird Collection Services, we have taken several steps to minimise disruption to our business to ensure we can continue to serve our clients through this difficult time. We are dedicated to supporting businesses of all sizes with their debt collection requirements.