In these uncertain times there is a lot of nervousness – people are unsure about what they need to focus on. First and foremost, cashflow is the life blood of every business. If your business does not have enough cash – it will not survive. Everybody understands that. However, when it comes to asking for outstanding invoices, there seems to be a different opinion.
About 70% of business owners that I have been talking to are afraid to ask their clients for payment of outstanding debt. They fear that it will damage their relationship with their clients or have a negative impact on their reputation. Some are deciding not to make any contact at all, they think that it is the right thing to do. I believe that they are missing an opportunity to show leadership, clarify confusion, build relationships and in some cases – to actually get paid!
If you are in constant communication with your customers (and yes this means to talking to your customers about monies outstanding) it will put you in a much better position for when this crisis is all over. The first morning back at work when you are dusting off the keys to the office, you will not wake up wondering who is still trading, whether they are open for business or if their business model is now different.
- You will already know.
- You will not have to trawl through your debtors list and start making calls blindly. You will know the answers.
- Your customers won’t fear answering your call because you have already had the conversation.
- You will have deeper knowledge of your customers because you have been on a journey with them.
This can do nothing but build and strengthen your relationship with your customer. Clients will absolutely remember how their suppliers behaved during this situation.
So what do you need to do now, before businesses start to come back on line after the restrictions?
- Clearly identify your debtors and creditors, specifically those who can pay you and those that you need to pay. My advice is that these are the first people that you call.
- Identify those that are unlikely to pay you and those that you are unlikely to pay if things get tight.
- In all cases communication is key, keep talking!
- Remember that everyone is in the same boat here. Coming on hot and heavy won’t work; pretending it isn’t happening will achieve nothing. During the peak of the recession in 2008/09 I was working in credit and collections and what did work was communication and working with customers and suppliers.
- What the COVID-19 pandemic has done is to slow us all down and it has shown a different side to people. People are at home and are communicating differently. They have dropped their guard.
- Take this opportunity to communicate with your customers on a different level, a more personal level and this will allow you to build more robust and stronger relationship now and into the future.
My final advice?
- Identify all your accounts & contacts and their roles, speak with the key contacts now in order to agree and put a written plan in place.
- Try and get confirmation of a commitment to pay
- Agree regular follow up calls and make sure you follow up.
- Even if nothing changes keep the follow up calls going.
- Ensure you have a plan to maintain communications remotely in the event the clients offices ‘closes’
Remember – Communication is key!