As we navigate the Covid 19 crisis, we all try to do our best to keep ourselves and those we love healthy. If you are a small business owner, it is also important to take care of the health of your business.
None of us know how long the crisis will last, and how long we will not be able to resume normal business operations. We’ve reached out to our lenders and landlords and delayed some payments. Small businesses can apply for relief with the Paycheck Protection Program of the CARES Act. However, we do not know when relief will come or if it will be enough.
Businesses need cash. Banks are flooded with calls. Businesses will look to borrow, or sell equipment, even barter for services, but often overlook an important source of cash – their own books.
You have a very good source of cash available to you today – your accounts receivable.
Why not take a look and see if you can recover some of the money owed to you from delinquent customers? Sure, many people are in the same boat as you are, scrambling for cash, but not everyone is out or work or out of business.
It is more important than ever to speak with your customers, even customers who owe you money.
Reach out and speak with your customers. They will be reassured that you are still working. Surely you cannot get blood from a stone, but some customers may be able and willing to pay you something.
At very least, you will have a conversation with your customer and be able to assess their ability to pay in the short and long term. The information you obtain will help you manage your accounts receivable. You will be better able to plan which customers will be viable in the long term. Remember, this crisis is not going to last forever, and at some point, customers are going to want your product or service again, and will ask you to extend credit to them.
Some customers may need your product or service now, and you can use the opportunity to strike a deal with them to pay their outstanding balance first, and then a payment plan for new orders.
Be flexible with your payment terms and payment options.
Use this opportunity to set up or revise payment plans with your customers. Offer to delay the first payment, or take an interest only payment the first month.
If you have traditionally received your payments in person or in the mail, your payment stream will suffer, and you need to change it up. If you are not taking credit cards, start doing so immediately. Look at PayPal, ApplePay, Venmo, or any way to make it easy for people to pay you.
Do not forget, even now, to document payment plans.
The actions you take today will either hurt or help you in the long term. Invest your time in reaching out to your customers. Do not be afraid to contact customers who owe you money. You will be pleasantly surprised that many want to pay you, and will pay you something. Those that cannot pay you today might make a promise to pay you tomorrow.
