04.25.2022 | Posted by Erik
Post-Covid Accounts Receivable Management: Revising Your Approach
Two years have now gone by since the start of the pandemic. Everyone was panicking in the beginning, with many organizations worried about how COVID would affect their business and if they’d even survive. As an accounts receivable management firm, we weren’t immune to these concerns.
Some industries were hit hard, and others fared better than anticipated. In either case, many of the companies that survived were able to do so because everyone really worked together.
From lenders and banks to vendors, customers, and the government, everyone joined forces to help as many companies survive as possible. However, now two years later, the landscape has changed significantly.
The government is no longer giving assistance, and we’re dealing with things like rising interest rates, supply chain issues, and heightened geopolitical tension. Just like during the pandemic, some companies aren’t really affected, while others are in danger.
If you’re a B2B company that collects payment from other companies, you might be wondering what you should do right now, especially if you’re dealing with slower-paying customers.
Should you maintain the payment term changes you made during the pandemic’s peak or roll them back? Should you add new contingencies to help struggling companies?
As an outsource receivables management firm, we have some advice on how to revise your approach and handle slower-paying clients in a post-Covid climate.
Considerations Regarding Payment Terms Post-COVID
During the pandemic, many producers gave their customers a lot of leeway. For example, rather than the standard Net 30 terms, they might have extended it to Net 60 or Net 90 to help their customers stay in business. Does that sound familiar?
As an accounts receivable management firm, we’ve found that many of our clients gave their customers more lenient terms, and they haven’t revisited them since. In many cases, their customers don’t actually need these terms anymore. So, it might be time to roll them back.
Here are a couple of things to consider if you’ve been offering your customers more leniency during the peak of the pandemic or if you’re dealing with slower-paying customers post-pandemic:
- Reevaluate your terms. Take a moment to look at all your customers and terms. See if there were any instances where you extended terms or provided special circumstances due to hardship. Now, take a moment to see if you need to continue to offer this leniency. For example, retail was hit particularly hard at the beginning of the pandemic, but research indicates that the industry has rebounded faster than expected.
- Check on turnover in ownership. There was a lot of ownership turnover during the pandemic, with many older business owners cashing out and passing on ownership to younger family members or employees. As an outsource receivables management firm, we see these changeovers as huge potential exposure points. Take the time to see if there were any ownership changes. If there were, make sure the credit profile is updated and that no other major operational changes have occurred.
Once you’ve checked on these things, there are additional steps you can take to protect your company moving forward.
How to Protect Your Company In a Post-COVID Business Landscape
First things first, if you need to roll back some of your terms—do it. Your customers should understand your goal of getting things back on track. Second, take the time to look at your biggest accounts and make sure all your i’s are dotted, and t’s are crossed.
It’s important to stay in close contact with your customers to get any industry-specific updates. Maybe they’re facing hardships related to the supply chain, or perhaps they’re relying on old excuses that no longer apply.
Here’s the thing: it’s important to reach out directly to your customers to get insight into what’s happening in their industry. If they need leniency, you can definitely provide it to them, but don’t let your customers take advantage of your kindness. Offer leniency when needed, but don’t be afraid to pull back the reins.
Another thing to consider is securing a good credit insurance policy if you don’t already have one. Even if you have one, now is a great time to shop around. When COVID hit, credit insurance companies raised prices and avoided certain industries in an attempt to minimize losses during the pandemic. Now, they’re loosening up restrictions and approving more accounts at much better rates.
As an accounts receivable management firm, we recommend getting credit insurance if you have a really big exposure. For instance, if you have one or two big clients that make up most of your revenue, it would be advisable to protect your business interests.
Get Started With An Outsource Receivables Management Firm
Here at Axim, we’re an outsource receivables management firm that’s well-versed in customer-service-based collections in a post-COVID world. We helped our customers navigate turbulent waters peak pandemic, and we’re helping them continue to get paid as the world continues to move forward.
In addition, we have relationships with several credit insurance companies and can get help our clients negotiate a great deal.