Although a recession has not been officially declared, most agree that we are on our way. Almost immediately, unemployment claims have shot up and the stock market – well, you know.
Times like these are scary, but even if your business is officially closed, it does not mean that you should managing your accounts receivables. Now more than ever is a good time to communicate with customers who owe you money.
Of course, a hard-nosed “pay or else” approach will get you nowhere – now or at any time. However if you reach out to customers and speak with them, you may find that some are willing to pay you. Perhaps you will have to wait a little longer, or perhaps you need to offer a discount or a payment plan.
Remember that even if the money has been owed to you for months, or even years, your customer would have to pay you with today’s dollars.
So, listen. If your customer is unemployed, or if a business, one that is shuttered, you have a decision to make. Do you want to take a long term view, and try to wait for better days? Perhaps your customer will be willing to give you a smaller, good faith payment now, with a promise to pay the balance later. In better times, you can tie that payment into new business.
Focus on long time, loyal customers. We are finding that although people are scared, they still want to pay something. You may find that people value your product or service enough to work something out with you.
With newer customers, be more careful about offering new lines of credit. Gather what information you can about them and get the best credit decision you can. If you do decide to grant credit terms, take a deposit. People with some skin in the game are more likely to stick to the terms of the deal.
As always, credit terms should be in a written contract signed by both parties.
The important thing is to keep the lines of communication open.
All things must pass. Better days are ahead.