Research has revealed the potential for a global crisis such as COVID-19 to lead to chaos in the realm of economy. The impact on your customers is evident in an increased level of delayed or defaulted payments, deficiency in liquid assets, and even the bankruptcy of their businesses. These challenges are part of what make debt collection unexcused from the major disruptions to the business sector. However, we have learned that there are many ways to minimize the likelihood of your business’s cash flow deteriorating as a result of COVID-19.
Evaluating your customer’s behavior prior to entering collections is essential in anticipating how they will perform given the current circumstances. If you are able to identify a customer as one that would likely not be in the collections area if it were not for the COVID-19 pandemic you are then able consider the probability that they may be able to return to good standing once these specific financial stressors come to pass.
In the years following the financial crisis of 2008 credit accounts were returning to good at an increased rate. This was credited to the financial morality of the customers that held the accounts created during that time. These customers had a short-term payment issue that was resolved upon reacquiring a steady earning.
Gathering as much information from the customer in regard to their situation will lead to creating a collection strategy that is focused on customer retention and best meets the needs of the parties involved and also garners loyalty and trust.
Categorizing your collections accounts based on the likelihood and severity in which COVID-19 will affect them is a good start in developing strategies that accommodate their differing needs. Based on the level of risk you may consider renegotiating the terms of repayment. For example, for a customer in a relatively good financial position, you may provide short-term relief in the form of waived fees or interest in exchange for prompt payment. It is of course critical to adhere to your company’s credit policy.
Finally, having an established accounts receivable process is an imperative asset to your company and adjusting these operations to the current climate could be a necessary improvement. It is important that any changes are recorded properly in order to maintain the reliability of your data as well as avoid errors across the board.
For more information on how Account Resolution Team can help YOU get your money in 2021, call 423-586-7613 or visit www.accountresolutionteam.com