Building a Better Conversation Around Collections
It’s obvious by now that the COVID-19 crisis isn’t going away any time soon. The economic impacts of this pandemic have been enormous and far-reaching, and it may be years before businesses in certain sectors get back to normal.
In the beginning, many businesses thought this would be a short-term setback and that by the end of summer, the market would have recovered. As a result, they spent their savings to bridge the gap in revenue, anticipating that they could make it up later.
But as weeks have turned into months, savings may have dried up and cash flow can become a real problem. Invoices have gone unpaid, leaving businesses in the lurch when it comes to their own bills and vendors. When many are hurting financially like this, collections and predictable income become more important than ever.
Collections in a Crisis
Businesses that have to collect on their accounts are in an awkward position right now. It’s hard to be the bad guy and demand that your clients and customers pay their bills, knowing full well that they’re struggling too. At the same time, you have your own bills to pay — mortgages, rent, payroll, and everything else — so you need that cash flow to stay afloat.
The first step is clear communication. The worst thing you can do in a crisis is to be the unfeeling, faceless corporation that’s sending overdue notices in the middle of a disaster. When this all passes, the reputation that you’re building will stick with you and continue to have repercussions.
To that end, humanize yourself to your clients and customers. Tell them that you want to continue providing for them and solving their problems, but you can’t do that without cash flow. Show them the steps you’ve already taken to be as economical as possible, like applying for PPP loans if applicable and other assistance, cutting expenses, and so on. More importantly, walk the walk. If you’re pushy about payments and then issue huge corporate bonuses, people will find out about it.
Communication also means making sure that your customers aren’t blindsided by their bills. As soon as they purchase something from you, make sure they know what they owe and when they owe it. Send them reminders when the due date approaches so they can work it into their budgets, and be firm about collecting payments when the time comes.
Make Payments Easy
One of the most frustrating customer experiences comes when a customer wants to make a payment, but can’t figure out how to actually pay. We’ve written up some detailed ideas on how to make payment a more customer-centric experience, but the summary is that you should be as flexible as possible when accepting payment.
If a customer doesn’t want to mail you a check or pay for business checks, don’t make them. If they want to pay with PayPal, that’s fine too. Some methods will require more legwork at your end to move the money into your coffers, but they’re better than not getting paid at all.
That ease of payment translates to the way you communicate, too. If you send an email reminder, include a link to your online payment portal. If you send a reminder in the mail, provide a phone number and prepaid envelope so they can send you back a check or call in with a credit card. The more friction you can remove from the process, the better.
Be Open to Negotiation
Like we mentioned before, some payment is better than no payment. If you have a client that’s not paying because they’re genuinely struggling, work with them if you have the ability to do so. Offer them a line of credit with collateral. Set up a payment plan so they can pay you back over time. Talk about their needs — maybe they can transition to a lower-cost service plan with your company that won’t be such a burden. If you can show your clients that you truly care about helping them through these difficult times, they’ll never forget your generosity.
The truth is, no one has a handbook for this kind of crisis. We’ve never seen something so severe or far-reaching before, and there’s no obvious way to handle it. What we do know is that it will pass eventually, and the companies that come out the other side will be the ones with their eyes on the future, not just the present. If you can walk the line between firmness and fairness, you’ll be better prepared for the years ahead.