Here at Esker we recognise that companies are facing uncertain and difficult times. Today’s unprecedented situation has had a direct impact on businesses and their ability to manage their AR process and collect cash. As a credit and collections manager, your job is to preserve cash flow and provide the same service level to customers.
We’ve compiled 7 tips to help you adapt your collections strategy, continue collecting cash, take care of your customers, empower your team, and come out on top (without being impacted too severely) and will be sharing a series of blogs over the coming few weeks with advice to help companies manage their receivables and collect cash in difficult times.
Tip 1. Reassess your receivables situation
While some customers have seen little change to their operations, others have been heavily impacted and, as a result, are struggling to pay their invoices. Fast action is imperative, but before diving in headfirst, you must take the time to analyse your business and understand what cash can be realistically collected, what customers you can talk to and who is at risk.
Start by analysing your customer portfolio to understand:
- Customers by industry – who are the customers most impacted?
- Outstanding balance by industry?
- Outstanding credit covered by insurance vs. uninsured total (evaluate potential loss)
Assessing your customers’ profiles and situations will help you better manage your credit risk and focus your resources where they need to be.
With an automated collections management solution customers can easily be grouped into categories such as industry, profile or other criteria that you may need, so you can create lists and reports on specific customer groups. This can be particularly useful to;
- Gain visibility on the total cash tied up within specific customer groups by creating aged balance customer listings
- Share reports internally to provide visibility to other stakeholders
- Get in touch with customers using appropriate methods
Having completed your business analysis you can begin to adjust your collections strategy.
Tip 2 . Adjust your collections strategy
Your collections strategy was established in the context of ‘ business as normal’. If the situation changes, your strategy must be adjusted to continue to bring efficiency to your cash collection process.
- Review the need for sending payment reminders vs. making collection calls and adjust your strategy accordingly
- Defer any calls that can be deferred (depending on customer situation and outstanding balance)
- Prioritise the largest amounts to collect or the riskiest customer groups
- Send dedicated messages to specific customers or group
With an automated collections management solution you can easily review and edit your collections strategy to better adjust to the situation at hand, for example:
- Enable or disable payment reminders for all or certain groups of customers
- Change the thresholds (value or days outstanding) to trigger an action such as calls and emails
- Refine your collection calls needed list by disabling low balances or low-risk customers
- Defer calls that can be deferred
- Use bulk messages to address more tailored communications to specific customers or groups
You and your team need an efficient collections process, especially if you are operating with fewer people. Your immediate objective is to collect all the cash that you can and help ensure all efforts are focused on achieving this you can suspend usual activities and switch to special collections mode with specific actions.
For more advice on how to effectively manage your AR process during these unprecedented times download the eBook here https://info.esker.com/eBookAR7Tips