Covid-19 and cash receipts: 4 levers for good accounts receivable management
The State Guaranteed Loan (SGP) is a cash contribution that allows companies to temporarily offset their shortfall, but this device is not perfect and it will not be enough. Companies will have to change and adapt to ensure a quick and sustainable recovery of their business and to absorb the failures of their own customers.
“ To improve, one must change; therefore to be perfect one must have changed often” said Winston Churchill.
The crisis is an opportunity to rethink your risk and credit management, now is the time to optimize your sales-to-cash process. Christophe NOBILETCEO of EXPERT CREDIT MANAGEMENTand Scarlett FAVRE-VERANDDirector ofEFFICASH provides you with 4 key levers on which any company can act, whatever its size or sector.
Maximize your chances of getting paid by ensuring the quality of your customer data
Address your invoices and reminders to the right person to increase your chances of getting paidon time.
Strengthen the quality of your contact information to keep your customers in sight:
- Customer contact information must be filled in or updated for each of the 3 key steps of invoicing sending invoices, validating invoices and paying invoices. The postal address is obviously essential, but do not neglect the e-mail. Contact hotlines or even mobile numbers are also essential when email does not work/no longer works, or when access to it is limited.
- Have a single view of your customers: centralize customer contact information to maintain reliable and unduplicated data, in a CRM such as Salesforce for example.
Reduce your customer payment times by dematerializing your invoicing
In these times of confinement, it is now time to go all-digital and implement paperless invoices immediately.
To be sure that your customers pay you as soon as possible while postal services are reduced and companies have, for many, generalized the telecommuting:
- Systematically send your invoices by e-mail in PDF format, specialized desktop publishing providers can save you time in the transformation of this process. It is efficient and economical. You will be assured that your invoices do not go astray and that they reach your customers. Finally, this system signs the end of the era of paper copies of invoices, false customer objections or late mailings.
- Set up direct debitspayments by e-mail or sms, payments by credit card or bank transfer Exit” payments by cheques and bills of exchange that are too costly and risky, either because they arrive late or are lost, or because they are without funds.
- Generalize the reminder with automatic personalized emails or targeted phone calls. Paper reminders written in a conventional way… we forget! Your cash flow should not suffer from late payment, work for an immediate result.
Improve your working capital to reduce cash flow pressures
The working capital requirement reflects the financial impact that a company incurs because of the time lag between cash receipts and cash disbursements. A high working capital requirement can lead to cash flow difficulties, so a good manager must constantly seek to improve it and regularly rethink his processes.
The 3 steps to improve your working capital:
- Accelerate the management of your flows
- Industrialize and automate the management of cash receipts for a “Just in Time” management of outstanding receivables
- Deploy a simple customer credit management tool to :
- Automate your workflows
- Personalize your financial customer relationship
- Reinforce your customer follow-up actions and act without delay: “1st contacted –1st paid
- Know your customers and their risks better
- Rethinking the management of your credit agreements
- On-site or online training (virtual classes)
- Audit/flash diagnosis/recommendations/project management/change management or support (especially dematerialization)
- Outsourcing of management to act without delay (tools, processes, skills)
- Internalization: sending in-house skills to reinforce existing teams
Bring in your cash by strengthening your customer communication
The crisis is here and affects everyone. One of the benefits is that the lack of money is no longer a taboo subject. Sales teams and customers are more easily mobilized when it comes to saving their business.
In this context, the threat is not very useful for getting paid In this context, threats are not very useful, but knowing how to deal with customers makes all the difference:
- Put yourself on an equal footing with your customers
- Opt for a simple, short, concrete speech
- Be empathetic and assertive, your customers are in trouble too; they will appreciate your understanding of them
- Delegate the collection of your outstanding debts to experts if you don’t know how to do it systematically and professionally. Debt collection is a profession in its own right and requires a perfect command of telephone negotiations. In times of economic crisis, one cannot simply demand payment of one’s invoices, one must negotiate with one’s clients, especially when the courts are closed and recourse to legal proceedings is very limited.
Would you like to know more about our cash management support solutions?