Coronavirus: How to handle your aged debts and your customers?
In these unprecedented times, your cashflow is more critical than ever as you try to weather the storm that is COVID-19 and the likely recession that will follow which some experts state will be short, but sharp.
So, how best should you deal with your aged debt and your customers? Here our top tips to help you navigate these troubled waters:
1. Don’t delay
The first thing you should ensure is that you are constantly reviewing your aged debt and looking at where you need to take action, especially on larger balances which could give you a significant boost in your defences if collected quickly. If you usually give chance after chance for payment to be made, now is the time to act more quickly. As soon as a debt is overdue, send a letter or instruct us to send one for you. Communication is key and the sooner you, or we, can start talking to the debtor to arrange repayment, the better for your cashflow and your headroom to withstand any losses from debtors that may, perhaps inevitably, fall into liquidation.
2. Be reasonable
Many people are now in the same boat in having little job security and, indeed, may have already been laid off or furloughed, potentially losing anywhere from 20% to all of their salary (the government will provide 80% of the salary for those who are furloughed). This in turn will likely mean that debtors are unable to pay in full or on time. This is where you need to be reasonable with repayment. It may be that debtors now need to enter into instalment plans you would never normally agree to but, in the circumstances, you should consider all options.
3. But be assertive in having a formal plan
Having said you should consider repayment proposals, you should also be assertive. Have a formal plan in place, preferably in writing, setting out precisely what process your staff should adopt to chase outstanding debts and what length of payment plan you are prepared to accept. For example, accepting £1.00 per month on a £5,000 debt is clearly not going to be in your favour. As such, ask for written proof of the debtor’s income and expenditure, probe whether they have been laid off or furloughed (the latter being more favourable to you), or whether they are in receipt of social security.
4. Access government help
Whilst addressing your aged debt, it would also be useful to consider the government schemes that have been announced recently, such as the Coronavirus Business Interruption Loans, in order to assess whether any of these can help your cashflow in the short term until we, hopefully, get to grips with this pandemic.
For further help and advice on your cashflow, or any other issues you may now be faced with, please contact Craig Chappell on firstname.lastname@example.org or call Craig on 0113 399 3423.