Credit Management in times of Corona – here is how you do it
The pandemic is teaching us many things, one of them being the importance of an adequate accounts receivable management. Almost every company is dealing with customers who pay late. From experience during the past few months we noticed that the number of customers paying late is increasing. Some companies have difficulties managing the home office situation, others currently do not have enough revenue to pay their invoices on time, and some even deal with insolvency. So what can you do to improve your credit management? In this blog, we give you our top 5 tips!
1. Figure out whether the reason for non-payment is related to the pandemic or not
Did your client already pay invoices late before the pandemic, or is it the first time your client pays late? Many customers pull the ‘Corona-card’ at the moment and try to delay payment. If your client is paying late for the first time, you can ask for a proposal on how and when you can expect the payment, preferably by a certain date. If the customer is willing to pay, (s)he will come up with a proper idea. In that case, it is recommendable to meet your customer in the middle and grant a longer payment term, to keep the client and to help out when needed. Your client will surely remember that gratefully for future transactions. If your client is always paying late, make sure he does not abuse the situation and your empathy. Communicate clear rules and regulations to ensure the debtor pays the outstanding amount as soon as possible.
2. Make sure to have a written agreement
In case you and your customer agree on a new payment term, do not only confirm this agreement by phone or in person, but put it on paper as well. Only this way you will have a document you can refer to if the client does not stick to the agreement you made.
"Always communicate! Show honest interest in the client and his struggles, discuss challenges together and approach debtors with a solution-oriented mindset"
3. Less sales? Solve old disputed claims
Customers might purchase less, so make sure to use this time to clean up your accounts receivable management by solving all disputed claims you possibly can. Unfortunately, we are still at the start of the economic recession in front of us. The later you resolve your disputes, the smaller the chances your client will be able to pay you. Therefore, solve your disputed claims as soon as possible.
4. Find a way to reach your debtor
If your debtor is located in a country with strict lockdown-measures, reaching your debtor can be a challenge. Check your previous communications to find a way to reach them. Often, you can find more information on their website. It can also be helpful to ask at the reception or via a general email address, for specific contact details of the person or department you want to reach.
5. Be reachable
As much as you can struggle to contact your debtor, your debtor might also be struggling to get in touch with you. In case you are less reachable by phone, make sure you have a proper voicemail that indicates how you can be reached best. Many companies are easier to reach via email during this time. Display this clearly on your website and check your emails regularly as well.
Proper credit management can be crucial to stay viable during the economic recession the pandemic is bringing. Despite all the major downsides, Corona also provides opportunities. After all, companies now have extra time to improve usually unprioritized processes, such as the accounts receivable management. Be sure to make the most of that opportunity!