Maintaining reliable cash flow is among the toughest challenges for any business. And a critical part of that is collecting bills that become overdue. But reaching out to hard-earned customers to ask for payment has always been one of the most uncomfortable and delicate tasks in business.
In a time of crisis, it becomes infinitely more challenging.
Suddenly, previously reliable customers no longer pay on time. Some stop paying entirely, and even the best ones may stop taking your calls while their voicemail becomes uncharacteristically full.
Even when they DO answer, it isn’t helpful. With apologies, they can’t resolve the account for an indeterminate period because of the pandemic, supply chain issues, or their own receivables running slow. Some may chastise you for even asking at a time like this.
It isn’t just you. Virtually all business models, both B2B and consumer-facing, from healthcare providers and trucking companies to landlords, are in a similarly precarious situation.
In many cases, the customer may have an impeccable track record, and collection issues can be an entirely new kind of problem—one that changes the relationship. Good customers are hard to find, cost of sales is higher than ever and every single customer relationship is cherished. Most importantly, your brand reputation is priceless and can easily be damaged forever.
But here you are. Even your best customers are holding out, and you have growing obligations of your own.
It’s painful and a source of tremendous stress for business owners and Accounts Receivable managers.
Here’s the kicker: it may still become worse.
Ongoing restrictions have only just begun to take their toll on businesses and consumers. Most are sitting on a decimated cash stockpile (if not a debt burden), waiting for a turnaround that has been promised for many months. Those who have access to money are clinging to it or paying essential bills and taxes—until it the last of it runs out.
And despite the sparse optimism from a minority of politicians and analysts, the crisis continues to worsen for many. The subsidies, stimulus packages and deferrals are gone, and payback time is looming for Canada Emergency Business Account loans.
Buying habits and spending patterns have been massively disrupted, in many cases permanently.
If your business is already struggling to collect overdue receivables, it doesn’t take a master economist to envision what could be in store. And most experts concur it will remain very bad, for longer than many independent businesses can withstand.
What can businesses do?
There are 6 important steps every business owner needs to take in order to minimize risk and be as proactive as possible.
It’s past the time to accept that this is a hard reset, not a simple reboot (or a series of them). It is a golden opportunity to reinvent your business to become better, more efficient, and eventually more profitable than ever.
Numerous businesses have failed, and many more still will. It’s becoming clear that those who survive to reinvent the future will be the ones whose leaders are smart, bold, innovative and highly proactive.
I hope the latter group includes your business. Get energized, summon up your most inventive self, and take action! With that in mind, I’ve created a Business Recovery Guide you can download free of charge, to help you get inspired and on track.
Keep staying safe and healthy—and do everything possible to be sure the same applies to your business!