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How to reset your receivables for post-crisis growth

With COVID-19 vaccines distribution now underway, we may finally have come to the beginning of the end of this long crisis.


Once the pandemic is over every business is going to have to assess their financial situation. This includes evaluating and rebuilding their accounts receivables.

In this post we’ll show you can plan for post-crisis scenarios and set up your receivables for a prosperous 2021.

From crisis credit control to recovery receivables

Most businesses have spent much of this year managing difficult accounts receivables situations.

Delayed payments, defaults, bankruptcies, poor liquidity and general strains on cash flow have been seen across industries.

Successful companies have dealt with these problems in several ways. The keys to survival have been consistently analysing accounts receivable portfolios, and pragmatically adjusting processes, terms and operations.

When it comes to post-crisis recovery, some of these measures are still going to be relevant. New strategies however are also going to come into play.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1. Analysis of cash flow requirements and segmentation of your portfolio

The rollout of coronavirus vaccines to the whole population will be slow and may face setbacks along the way.

Similarly, there’s going to be an inevitable lag in businesses getting back to normal – with many practices having changed for good.

It’s therefore likely that many businesses’ liquidity will not improve for several months into the post-COVID world.

Historical data plus pragmatism

To protect your financial position, good forecasting will be essential. But data from the last 10 months isn’t going to be entirely reliable.

As the landscape shifts depending on different recovery outcomes, you’ll have to be able to combine historical data with flexible arrangements.

It’s crucial to continue to segment your portfolio of clients into Good, Average, and Poor paying accounts. For each category and customer, keep evaluating their risks and behaviours, as well as changes in their supplier networks and customer bases.   

 

 

 

 

 

 



 

 

 

 

 

The same level of analysis is required for your own business too. Your responses to changing scenarios might shift which of your customers are the most important to chase for cash flow payments.

2. Be prepared for different scenarios

Vaccine effectiveness, third waves of the virus, technical challenges and overall resilience of each industry will all affect how you rebuild your accounts receivable.

Visualise and play out different outcomes and assess how you would respond based on the financial impact to your business.

For example, a sudden return to normal in the hospitality industry might result in a group of your customers going from poor to good payers faster than expected. However, at the same time perhaps another sector experiences several bankruptcies.

To remain financially stable in this scenario means shifting your accounts receivable setup to recall the more reliable payments from hospitality, while allowing for certain sensitivities in ailing industries

By knowing your business’s top consideration you can effectively plan for almost any outcome as it occurs.

Internal organisation

Resetting your accounts receivable to be flexible for the recovery means getting on top of your internal processes:

  • Establish effective and efficient lines of communications between teams.
  • Ensure a central point of control.
  • Maintain visibility of all analytics throughout the organisation.

With these elements in place you can react to different customers appropriately throughout the recovery period:

  • Closely examine payment deferrals.
  • For arrears, ensure payment chasing procedures are followed up consistently.
  • Reallocate resources to high-value tasks.

3. Reconsider your AR tech setup

Customer expectations are going to evolve at different rates post-coronavirus.

More than half CFOs are reportedly planning to invest in technological solutions. Tech is worth considering in order to streamline and automate processes, saving time for staff to concentrate on important matters of business recovery.

Here are a few ways you can use tech to build recovery-proof receivables:

  1. Automated invoice reminders – using invoice credit control software like Chaser’s, you won’t have to worry about sending emails to several clients yourself. The time saved can be as much as 15 hours a week – and Chaser ensures templates are human-like, sensitive and professional.
  1. Credit control software set up automated schedules and payment reminders to your customers.
  1. Customer payment portals – make billing and invoicing easy so there’s minimal friction between you asking for payment and your customers sending it.

The more you can integrate effective accounts receivable automation into your recovery model, the more prepared your business will be for whatever the next year throws at you.

Conclusion

Analysing your customers, and anticipating their needs as best as you can will give you the ability to react quickly to changing outcomes.

Don’t expect the pandemic recovery to be fast – but do prepare for shifts in customer cash flows to continue.

The best way to build growth post-COVID-19 is to set up an adaptive model for your accounts receivable.

Utilising powerful credit control solution like Chaser’s is going to be your best friend in making sure your cash flow isn’t an issue as we head into a more optimistic year.

Our customers get paid 16 days sooner on average. So sign up today and try Chaser for free for 14 days to prepare for the “next normal”.

 

Topics:
Features
Credit Control
Chaser
Covid-19