Your Plan Has Never Been More Important

America is roughly six weeks into unprecedented challenges and we are seeing light on the other side. The mitigation and prevention efforts seem to have slowed the progress of the virus. Thankfully, this has led to significantly fewer hospitalizations and fatalities than was predicted just a few short weeks ago.

This has brought us to the point where we can start thinking about the other side; relaxing some of the restrictions required to beat back the virus. While specific time frames for businesses, cities, and states to begin opening are still fuzzy, it appears more and more of us will soon be able to go to our job sites and many businesses that were closed will have the opportunity to reopen.

As we return to a more normal environment, what challenges await those of us in finance and credit? This crisis has caused disruption that will take months and years to resolve. Recovery is going to take a focused, disciplined effort over a long period of time.

  • Credit Risk: Never in such a short period of time have we seen credit risk increase so rapidly! We know from discussions with clients and industry experts that cash receipts are down significantly. With so many companies having been completely shuttered and others operating at a fraction of their capacity, what new steps will you be taking to ensure orders released on credit are paid within terms? Chances are that post-crisis, a larger portion of your day will be spent with new credit risk, reviewing and releasing orders, and talking with sales staff and customers. Even your best customers’ payment habits and risk profile prior to the crisis may be irrelevant in the near term.
  • Collections: Selling on open terms requires follow up with customers that are past due. With so many resources being spent to minimize risk with new orders, how will you dedicate time and resources to follow up with customers that are past due? How will you treat customers that have been negatively impacted by the virus? If you allow them more time to pay, how does that impact your company’s cash flow? If you do allow more time, how much time is reasonable? Your in-house recovery efforts are going to be time consuming and complex as we get back to work.
  • Business Environment: Recently, government aid and assistance was codified and transfers have begun. While it seems like it took forever, in just six short weeks, ideas were hatched and debated and our government has already infused trillions of dollars into consumer and business bank accounts. How will those dollars help your customers? Will your customers qualify for assistance? If they get assistance, is it enough to allow them to survive? These are just some of the questions we are already working through with our own portfolio. We are finding every situation is unique and requires time and effort to identify the impact and solution for each customer.
  • Doing More with Less: While your customers are impacted, let’s not forget your own company. Businesses are watching cash more closely than ever. Hiring freezes have been implemented and we are in a business climate that requires you to do more with less. As you make your plans to emerge from the crisis, how will you dedicate resources to ensure all this important work gets done?
  • Resource For You: We know you’ve been thinking about these challenges throughout the past few weeks. The most important tool you’ll need to move forward is a plan. We have been collaborating with clients and industry experts to gain insights as to how businesses are planning to move forward. We are happy to talk with you about your plan to manage credit risk and generate in-house recoveries. A hallmark of our service is our ability to partner with finance and credit professionals and develop programs that increase in-house recoveries and minimize collection expense and labor. Much of the insight we share centers on maximizing in-house recoveries so that third party use diminishes. Contact Receivables Control.

Time is of the essence to put plans in place. Many of the companies that are delaying payments have just been funded and it is important that you employ resources to engage in conversations to prioritize and collect your accounts receivable. Timely actions now will prevent large losses later.

Finally, we must express sympathy for those that have been impacted by the devastation of Covid-19. We are grateful to the healthcare professionals and first responders for their efforts to protect us and bring us back to health. We wish you all the best as you work through today’s challenges and start looking ahead to the next phase.