A Post COVID-19 era for Businesses
Even with the arrival of a new vaccine, the world is once again on high alert due to a new highly contagious strain of COVID-19.
If I can use the following metaphor: it seems that every time we think that there is light at the end of the tunnel, it appears that it is just another train coming!
As the year draws to a close, twenty-twenty will probably be regarded as one of the most challenging and difficult years that the world has ever seen; in the words of Her Majesty the Queen, who once described a difficult chapter in the life of the Royal Family as an annus horribillis year (Latin, meaning “horrible year”), for me twenty-twenty will be regarded very much the same!
COVID-19 has relentlessly ravaged through the world’s population, causing; heartache amongst families, devastation amongst communities’ strains on medical care and put acute pressure on some governments and welfare systems. It has also left many businesses facing an uncertain future or even financial ruin.
Throughout the world, during these challenging times, many businesses have been turning to their governments for either direct financial support or indirect action through legislation to help weather the storm during the pandemic.
Most governments have been quick to respond. Such unprecedented support is designed to protect as many jobs as possible, to prevent the economy from imploding and to ensure that businesses remain viable when normality returns if such a word will ever exist, as we know it.
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For further information speak to one of our experts.
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Need to talk?
For further information speak to one of our experts.
03333 444 991
In my last blog article that I wrote in May, “A Guide to Debt Recovery for SMEs During COVID-19″, I wrote about the importance for businesses to develop a strategy to prevent and protect themselves from bad debt during these challenging times (you can read the article by clicking on the title above). I was trying to emphasise that business should devote as much time as possible to developing a cohesive and sustainable Debt Collection/Recovery strategy around the six-core principals of debt prevention.
In this blog, I want to touch on what business should be doing regarding their Credit Control procedures to prepare themselves for a “new” post-COVID-19 era that will evolve after the virus has “disappeared” (I believe that this is one of the “famous” words of a soon to be ex-president). Not only have some businesses had to contend with the virus, but some have also had to manage the effects of officially leaving the European Union on the 31st December. Quite a challenging year!
It is a fact that out of every crisis, there is an opportunity. Therefore, at this juncture, businesses should be looking at new ways to reinvent themselves to meet the challenges that lie ahead in the future.
Reinvention does not just mean finding new markets, products and or services; it can also mean developing new strategies and investing in technology that can save time, money and perhaps finding new ways to increase productivity. Over the last nine months or so, I believe that many businesses have risen to the challenge by investing in new technology and (or) have found different ways of working to assist their staff and customers whilst operating in situ or remotely.
It is a known fact that most businesses cannot survive without capital! At the time of authoring this blog article UK interest rates are 0.1%, a historic all-time low, and they are forecast to remain low for the foreseeable future. With the widespread availability of government-backed loans, payment holidays, flexible terms, cheap money is readily available; therefore, if you can, now is the time to borrow money to invest!
I am not advocating that businesses borrow money for the sake of borrowing because, at some point, it must be paid back. I am merely stating that now is a good time for businesses to borrow to invest in technology to foster new and different ways to become more efficient for the future.
One area that often gets overlooked for investment is a business’s Credit Control. In my experience many SMEs, Credit Control is often administered using “knee jerk” reactions and time-consuming methods. In fact, I have found that many SMEs do not have a dedicated person or department assuming the responsibility. To be perfectly honest, this can be a real problem; with this arrangement, late payers are often usually only ever contacted when payment is well overdue, or there is a blip in the creditors cashflow situation thus, invariably this “strategy” it is often far too late that can cause businesses many issues. Above all, it sends a clear message to the debtor that a business is not organise or simply tolerates late payment.
Frankly, nowadays, there should be no excuses for poor Credit Control. Right now, the market is awash with excellent and affordable accounts/credit control software packages. Most, at the very least, provide automatic email overdue payment reminders. The vast majority can also be linked to a business’s bank account that can provide real-time detailed information and alerts to help a business keep track of their finances. However, what they cannot do is pick up the telephone and ask your debtor for payment nor can they provide “face-to-face” Doorstep Collections.
I am sure that right now, many businesses will be evaluating their overheads, and one of the highest costs that may be under review is their headcount. If roles have to be merge to save costs, then so be it!
However, businesses must understand that the Creditor Controller’s position/role should be sacrosanct. If late payers become a problem, there should be a fluid well-communicated Debt Recovery process to prevent bad debt from becoming an uncollectable debt. Ensuring that staff own the problem, and there is a clear strategy to collect payment is crucial. Over the years, I have lost count the number of calls we receive weekly for our Debt Recovery/Collections service from businesses that are owed money and have been waiting for a considerable length of time for payment. The older the Debt, the harder it can sometimes be to collect!
It is widely considered that a Debt Recovery/Collections Agency is the last resort before legal proceedings are commenced. However, I believe that this is an entirely wrong approach. Not only should businesses invest in prevention, but it should also invest in early intervention. Investing in a defined Debt Recovery/Collections procedure strategy is key. Bad debt becomes a bad debt when it is a day overdue!
Need to talk?
For further information speak to one of our experts.
03333 444 991
Right now, investing in a Debt Recovery/Collections strategy should be one of a business’s top priority. Incorporating watertight protocols to include Doorstep Collections is fundamental to preventing bad debts from escalating. Doorstep collections should not be considered an aggressive Debt Collections process, nor should it be considered as a last resort option or tactic. In fact, it should be considered as a relationship-building, fact-finding process, that can provide a business with a wealth of valuable information that can assist their next move. Collecting overdue payment face to face is crucial to a well-defined Credit Control process, however, utilising the right company with the right skill set can be critical to the outcome.
Managing payment, written/telephone reminders all have their place in an effective Debt Recovery/Collections strategy; however, Doorstep Collections should never be overlooked as costly or ineffective (it is not); I believe that this strategy should feature at the heart of any collections process as early intervention is key to securing a positive outcome.
For many businesses, the effects of COVID-19 may or may not linger long after the virus has gone. However, without “face to face” intervention can a business’s Credit Control/Debt Recovery be certain that late payment is a debtor’s own choice rather than their ability to pay?
I have often stated that a reputable Debt Recovery/Collections Agency will not do any damage to a business reputation or alienate their customers; however, take note, late payment and bad debt will because if businesses are not collecting what they are owed, they will not be able to invest in the business’s future.
Consequently, if businesses do not take this seriously, then it is only a matter of time before they stop being a business…
I sincerely hope that this time next year we can all look back at 2020 with a deep sigh of relief!
In the meantime, I wish you good fortune, a peaceful and prosperous 2021.