We are all adapting to a new way of working. Due to the current, unprecedented global situation, now it is even more important that ever to nurture and protect your relationship with new and existing customers. This applies to both debtors and creditors alike.
Given that no-one can predict how long or how badly the economy will be affected it is vital for ongoing business that cash flow is maintained as much as possible. We all want to see the economy back on its feet which means working together:
Set up a Payment Plan: In the current climate, the sledgehammer approach to collecting debts is counter-productive and will quickly alienate, leading to late or even non payment. You will generally have a good knowledge of your customers business. Try to reach an amicable solution which maintains your working relationship and results in payment. Consider setting up a payment plan – it is always better to get something rather than nothing.
Talk to your customer: By being reasonable and accommodating you are more likely to be paid and to continue working with your customer. There will be people who will take advantage of the situation to avoid paying their debts. However, long term this is likely to ultimately damage their reputation and therefore business.
Similarly, as a debtor, keep in touch with your creditor to reassure them that you have every intention of paying. Silence leads to a belief that you do not intend to honour your commitments.
Be realistic with your approach: Consider what business your creditor/debtor is engaged in and how their own cash flow is likely to be affected by the crisis. Are they continuing to trade? Are they likely to be being paid by their debtors? Have they historically been good payers? Do you want to continue working with them?
Act swiftly and definitively: We anticipate a large increase in the amount of debts both nationally and worldwide. The key to collecting your debts is to act swiftly. The longer matters drift, the less likely you are to be paid. Consider how best to request payment. Not all letters have to be “demanding” in nature, a payment proposal can be included within a letter requesting payment. We can help with negotiating payment terms on your behalf.
Be transparent: Similarly, if you are the debtor then be honest, realistic and reasonable about what you can afford to pay. Broken promises will lead to a lack of trust.
If you are concerned about your cash flow or debts and would like an informal discussion about your options or advice on how to set up a payment plan or negotiate payment terms, please contact our Debt Recovery team and we can arrange a call back.
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