There is no doubt that the coronavirus pandemic has been and is going to continue to affect consumers and their ability to pay their outstanding debts. In times like these, it may be beneficial to revisit your company’s financial policies and billing practices and decide when it is time to enlist the help of a professional debt collector.
There are countless reasons why consumers struggle to pay their debts, all of which are exacerbated by the current pandemic. Cash flow strains, income uncertainty, they may be business owners themselves and are struggling with having their own customers delay or default on payments, their business being shutdown, and even facing bankruptcy. Now more than ever, it is important to have empathy and understanding for your customers, all the while showing them the long-term benefits of staying on top of their payments and debts.
Reorganizing Your Accounts
Outstanding accounts can be placed into three categories: good, fair, and poor. “Good” accounts are those that are in a strong financial position and are unlikely to be financially affected by the COVID-19 pandemic and are expected to continue regular payments on their accounts. “Fair” accounts are those that are in a relatively good financial position and have a chance to be negatively impacted financially by COVID-19. “Poor” accounts are those in a weak financial position, pose a credible credit risk and have been severely financially affected by the pandemic. It is to be expected that these accounts are going to default on their payments.
It may be beneficial to sort through your accounts receivable and asses which accounts fit into which category, this could help with both short term and long-term recovery of the accounts.
Changing Your Invoicing Processes
The simple stress of financial uncertainty may be enough to make customers not pay on their owed accounts, and constant reminders of the debt will only add to their stress and avoidance. Now is the time to check in with those customers and see what could be helpful to them right now. Do they need invoices more or less often? Would sending invoices via email instead of postal mail help? After a bill is sent, you could contact the customer to make sure everything is correct, so that you are both on the same page and a balance has been established and understood. Increased communication is needed now more than ever, and customers will feel more at ease knowing they are working with a company who understands their situation and is wiling to go the extra mile to accommodate them.
Incentives for Early and On Time Payments
During normal financial times, it is not recommended to offer incentives for payments. But right now, and for some time in the future, it may be beneficial to offer incentives to those accounts in “Fair” and “Poor” standings. For those accounts in “Fair” standing, you could consider offering either a small discount or suspending late fees and interest. This may be enough to encourage them to pay so they can have it dealt with and not worry about the debt accruing more fees. For those accounts in “Poor” standing, you may consider the option of working out a payment plan with the customer. Have an honest conversation with the customer about what they feel they can afford right now and offer to re-evaluate the payments in the future. Small payments right now are better than no payments at all.
Still struggling to collect money owed? It might be time to call in the professionals. At Agency of Credit Control, we know that empathy and understanding go along way when it comes to dealing with debtors. We train our collectors to hold these values in high regard. ACC is one of the oldest and most respected collections agencies, and we have a highly skilled team dedicated to recovering you the money that you are owed. Want to learn more? Click here, we look forward to talking with you soon!