AR Deteriorates in Wake of COVID-19

Receivables Control has unique perspective of collecting AR across multiple industries and we have seen deterioration caused by the disruption of Covid-19 and the subsequent shutdowns. We want to review those sectors of the US economy that are negatively impacted and zero in on where we see significant AR dilution.

  • The travel industry is struggling. Airlines, hotels, and tourism are reeling. For example, hotels in every category, from discount to luxury, have been negatively impacted. Six months into the crisis: many are temporarily closed, some have permanently closed, and those that are operating are far from peak capacity.
  • Restaurants are still challenged by shut downs and operating at a fraction of capacity. In-person dining is soft and the take out business model doesn’t necessarily pay the rent. Thousands of restaurants have closed permanently with thousands more on the brink of closure.
  • Entertainment venues, movie theaters, etc., have not had significant revenues since the crisis began. Only recently have some of these businesses begun a return to limited service in regions of the country that support their openings.
  • Retail has been battered. On-line shopping has boomed, negatively impacting the mom and pops. Particularly hard hit are apparel retailers and department stores. Bankruptcies are up sharply in the retail sector.
  • The energy industry has been shaken. Globally, prices and demand are down. Domestically, production is off and supplies are strong; the producers and service companies have laid off thousands of employees.
  • Healthcare hasn’t escaped the economic crisis. The onset of COVID-19 and limiting services during the pandemic cut off providers from patients, negatively impacting revenues.
  • Commercial Real estate is soft. Store closures, pressure to reduce rents, and companies realizing they can do much of their work from home is contributing to what many predict will be a downturn in commercial real estate.

The economic message we receive from the media is mixed. The financial markets have mostly recovered from losses earlier in the year; however, volatility is expected to be with us for the time being. All one needs to do is look around their area and you will see shuttered businesses. This stress is negatively impacting the collectibility of accounts receivable.

It is time to increase your outreach efforts to contact your past due customers. A “wait and see” approach is the wrong path. Your customer is at the point that if they haven’t reached you, there is a good chance they are either going out of business or that they shut their doors already. Make time to scrub your accounts receivable aging and identify those customers that:

  • Are past due and not communicating with you.
  • Have not paid since the Covid crisis began.
  • Are paying so little, it will take months/years to recover the balance.
  • Are demanding product while offering no solution for their past due balance.

Simply put, using 3rd party collections, increases the urgency of your collection approach and recovers more money, more quickly.

  • Communicating with past due customers is our primary purpose. Its what our people do. We know how to talk with people facing challenges. We free your team up to work on new orders and newly delinquent customers so that they do not age to the point of needing collection action.
  • Each of our collection professionals works a managed case load to ensure complete coverage and frequent communication.
  • We are knowledgeable about the negative impact the shut downs have had on businesses and the economy. We know how to communicate with business owners experiencing stressful situations. Our solutions-based approach prioritizes your debt and resolves the delinquency, limiting the need for further escalation.
  • With so many companies temporarily shut down or closed permanently, our researchers find business owners and contact information so that we can discuss the disposition of the business debt they owe.

Your efforts to reduce delinquency require decisiveness. Customers are deciding to cease operating very quickly. Because your debt is one of many they owe, you are unlikely to receive forewarning. We have the resources and expertise to increase your effectiveness by focusing our time on the complex AR challenges so your internal staff can keep the fresher accounts paying.

To reduce you losses, put our professionals to work collecting your challenging AR. To learn more about how shutdowns are impacting your industry, reach out to Kelly Cronan at Receivables Control.