Consumers as well as the business community have been through a lot during the two-plus years of dealing with the COVID-19 pandemic. Many businesses had to drastically alter the way they conducted business and many as you know all too well were forced to shut down completely temporarily.
Consumers either lost their jobs, had their hours cut back depending on the industry they worked in, or decided to take on new careers. Consumers were also left with a whole host of other challenges including finding the products and services they use frequently and of course meeting their financial obligations.
The effects of the pandemic continue to cause challenges for consumers and the US economy as well as many other factors. Because of this, many experts agree the economy is changing in the year 2022 and could be headed for a recession.
How is your business compensating for inflation?
Inflation is increasing at the highest rate since the 1980s. We don’t have to tell you that every household in America is dealing with increased costs for some of the most basic items and services. And that also goes for just about every business. Have you sat down and analyzed how inflation is affecting your operation? For example, if you’re running a lawn care company, how are fuel prices affecting your cash flow? Do you offer other services such as fertilizer and how much more are you spending each month for basic inventory? These are questions you will need to answer often moving forward as these prices are changing rapidly. While ordinarily, you can absorb small fluctuations in the cost of goods, you may not be able to move forward.
Is your business prepared for a recession?
We learned a lot about debt collections during the COVID-19 pandemic. One of those lessons was that businesses need to maintain lines of communication with consumers in good times and turbulent times. Some businesses hesitated to continue trying to get customers to pay past due invoices during the height of the pandemic. But the proof is in the results and more and more consumers we’re thankful that the communication continued as well as the help they received in paying down financial obligations. Organizations that understood this weathered the storm of the pandemic. They continue to maintain cash flow and preserve their customer relationships. During a recession, you will see an increase and delinquencies and you will need to be prepared.
Review every aspect of your accounts receivables program now
Now is the time to button things up in your organization to make sure you have procedures in place to maximize cash flow and minimize late payments. It’s a good idea to either sit down with your bookkeeper or CPA and review every angle of your accounts receivables. This includes payment terms for customers, how those terms are communicated, timing and consistency of invoicing as well as procedures to follow up with customers who have not paid on time. You may also want to revisit all types of payment methods you accept to make sure they can still be effective. And if you need to update the due dates on your invoices from 30 days to 10 days, that’s a choice you’ll have to make.
If you don’t already use a collection agency, start now
Challenging economies also present more challenging situations when it comes to consumers paying their bills on time. Between rising costs in all areas of their life as well as the effects of a recession including diminished savings, your business will be challenged with more delinquencies. And, more reasons for those late payments. It is important for you to have a relationship with a reputable collection agency. Your business should not delay this any further if you’ve been thinking about it. There’s no telling how long challenging economic conditions can affect your business so it’s important not to be late to the game when it comes to implementing a strong accounts receivable program which includes debt collections.
A properly trained debt collector can not only help improve your cash flow but can also assist in preserving the relationships you have with your existing customers. In a challenging economy, you don’t want to lose that cash flow and you certainly do not want to lose any customers.
If your business has been thinking about hiring a debt collection agency, the year 2022 is the time to take action! Contact our team today and schedule a free consultation with our debt collection experts.