Since the COVID-19 pandemic happened, businesses all over the world have experienced a lot. Companies respond to the current standard as they go forward, finding new ways to deal with changing consumer dynamics and customer demand. Appropriate accounts receivable management becomes increasingly important as we maneuver through the COVID crisis (while coping with long-term consequences), especially for improving the company's cash flow and financial performance.
As a business owner, you can concentrate on collections while collaborating with everyone else is important to you – clients, vendors, associates, and so on. Optimized portfolios can contribute to wealth, in addition to can cash visibility.
Companies are required to use money from a reserve that was meant for another reason due to a lack of planned funds.
Businesses who file for bankruptcy frequently had issues stemming from an unreliable collection scheme, when they were unable to recover what their customers had forgotten to pay.
In a crisis, below are few suggestions for improving the accounts receivable method.
1. Better understand customers, easier determine total AR
During a crisis, you must understand what your clients are going through; others will be able to pay, and some may not. Following up with consumers also aids in determining total AR.
In difficult moments, provide full service to your clients, and your sincere care for them will be greatly respected and recalled after things have calmed down.
2. Keep them Informed
In business, the best thing you can do is take care of your current customers while attracting new ones with attractive deals. Keep your clients up to date with what your business is up to, and let them know if there will be any delays in delivering their orders.
Since your loyal customers contribute to your sales, concentrate your attention on keeping them satisfied, even though it costs you money. Since you now have a productive relationship with your current customers, you are more likely to be paid by them than you are by a potential client. If you want them to do business with you again, you'll have to be more open when it comes to taking payments.
In tough times, it is less costly and cheaper to keep a client than it is to pursue a new one.
3. Evaluate how the company manages AR.
Cash flow management, or accounts receivable management, is crucial at all times, but there is no more critical moment than during a crisis. The first step is to ensure that your financing opportunities are still feasible. During difficult times, previous funding sources can become unavailable.
Second, many businesses overlook their receivables when the economy is booming, while during a crisis, you can expedite the receivables.
As a result, it's necessary to review how the receivables are managed and perform a comprehensive collection audit. Be sure the accounts receivable team is collecting the correct sum for the products and services you offer, and that late payers are followed up with.
4. Provide payment plans that are more flexible
Customer payment conditions must be reviewed, particularly during a crisis, to allow them to pay on time. This is especially important if you have clients that you often have to chase down for payment. You must follow through with each of your customers to boost your accounts receivable operation. This is to understand their financial condition to determine if they need a payment schedule adjustment, an extension, or are content to pay the full invoice balance by the due date.
5. Create the Extension
Many of the clients will not have a career, may not be working, and may not have funds to pay you, even on a temporary basis, depending on the severity of the situation. If you do have any clients that are unable to pay, you might want to consider keeping payment periods for another 2-4 weeks.
It's better that you create the extension based on your own requirements; you can also assess each client and their situation on a case-by-case basis.
6. Offer a discount on payments made in advance or in full.
You will have clients who are willing to pay the whole sum owed, and you can accept it. Furthermore, you can give a discount to customers who pay in advance. This will not only allow them to pay you as soon as possible, but it will also ensure that the cash flow does not suffer.
7. Provide a variety of payment options
Payment delays are often exacerbated by the clients' dissatisfaction with payment systems. Add payment alternatives other than PayPal and credit cards to the company's payment system to turn it around.
Clients can find that using an electronic funds transfer system or a bank-to-bank payment method is far more convenient.
8. Outsource the management of your company’s accounts receivable
To maintain market success, the company's accounting functions must be handled effectively. This is why, for most companies, accounts receivable outsourcing is the right solution.
Since there are receipts to input on a daily basis and receivables to check up on, managing the company's accounts receivable necessitates regular and reliable examination and tracking.
9. Review the AR process on a regular basis.
You may want to check AR and AR turnover more often than average when cash flow control is still difficult. This will assist you with becoming mindful of the changes that your company's financial well-being requires from time to time.
The COVID-19 pandemic has had a significant effect on the global economy, with commerce, activities, and financial transfers both being affected. However, as businesses continue to operate while adhering to important workforce protection standards, cash balances are becoming more important than ever.
Our quality accounts receivable services at Irvine Bookkeeping assist companies with AR collection. We assist you in achieving the accounting clarity and insight you need in order to maintain cash balance and concentrate on developing and executing company sustainability strategies. We provide accounting back-office service to companies all over the world thanks to our vast industry knowledge and technical capabilities.
If you, as a business owner, see that you cannot handle accounting on your own, consider hiring an accountancy service for contractors to help you with it.
Call Irvine Bookkeeping now for a Free Quote!
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