How to Recover Your Accounts Receivables After Covid-19
The pandemic has not been kind to business. Many companies have struggled with poor cash flow, defaulting on payments and many have even gone bankrupt. Even now, businesses still struggle, so, understandably, that the financial situation of most businesses in the world is bleak. With that being said, however, with the high vaccine rollout, Covid-19 IS receding (albeit, slowly).
To plan for post-crisis growth, every business will soon have to assess its financial position. This includes a review of receivables: how much they are owed and how well they’ve managed them before the crisis.
Here is how to recover your accounts receivable to prepare for post-Covid growth.
1. Take an honest assessment of your current business situation
Although the business world is slowly opening up again and life is resuming to some sort of normality, there will be an inevitable lag in business. What this means is that business liquidity isn’t going to improve until 2022.
So how can you prepare for this? First, look at your receivables, specifically how much you owe and what percentage of these will be paid back in the next year. Next, you need to forecast your cash flow to make sure that you can survive this period. Lastly, it’s good practice to segment your portfolio of clients into A, B and C. A are great clients, B are average, and C are the poor payers. Prioritise who you need to chase for cash flow payments.
2. Prepare for different scenarios by improving your processes
Things are changing all the time still, so consider what changes could help your business if a third wave of Covid hits or you experience other technical challenges. How will this impact your business? Could you survive?
To remain financially stable in almost any scenario, you need to improve your processes, especially shifting your accounts receivable set up to recall more reliable payments. You can also reset your accounts receivable to be flexible for the recovery by closely examining payment deferrals and ensuring that payment chasing procedures are followed up consistently. The goal here is to get more customers to pay on time moving forward.
3. Think about customer expectations and invest in tech
Needs and expectations are evolving, especially throughout the pandemic, so the key to recovery is to anticipate these needs. Technology is a big area that a lot of businesses are focusing on and for good reason.
To build recovery-proof receivables in your business, you need to streamline and automate processes. For example, automated invoice reminders, credit control software, and customer payment portals etc.
Prepare your business for whatever comes next
The pandemic recovery is going to be painful, but you can take a few steps to prepare for and quickly react to changing situations. This is the key to post-crisis growth: consistently analysing your accounts receivables and adjusting your processes and operations until you create an adaptive model that aids growth instead of hinders.