During this difficult time, protecting your health and the health of your family is the most important task. Of course, the health of your business is critical as well. The Covid-19 crisis will end. When it does, you want your business to be in as good a shape as possible.
Keeping your business running and healthy might seem difficult in these days of forced closures. We offer the following six strategies for helping your company.
Get to Know Your Customers
Even in the best of times we urge you to make sure you fully understand your clients and their business. Today, it’s more important than ever.
Talk to your clients. Ask them how they are, share your stories and listen to theirs. Find out how the shutdowns are affecting their employees and their families, supply chains and cash flow.
Once you have a good understanding of what is happening with their business, think about how you may need to change your terms with them. If they were previously (COD) Cash on Delivery, you may want to switch them to CIA (Cash in Advance). Unfortunately, with some clients you may need to insist that they pay existing invoices before you accept new orders.
You can be open with your clients that you need the cash to pay your own bills and employees. The tighter your own working capital, the tighter you need to be when extending credit. Whenever possible, work with your clients to find a way you can work together and both succeed.
Be Wary of New Customers
Usually a new client or customer is cause for celebration. Today it should cause you to stop and ask questions. Why is the customer coming to you now? Will they pay you on time?
With new customers make sure to collect a substantial deposit or full payment in advance, especially if they don’t provide you documentation to show they can pay their bills. Consider running a credit report. It’s a small investment that could save you from losing a lot.
You want to be careful with accepting checks or credit cards. With credit cards, customers can do chargebacks months down the road. A COD order can be paid by a check that won’t clear or has a stop payment issued immediately after the driver drops off your merchandise.
Just because someone has a reputation in your local area doesn’t mean it is a good reputation for paying their bills. Check out what their former vendors say.
Did that company run up large bills and then negotiate for a discount after delaying payment for months? No one needs a new customer like that.
Save Your Cash
Here’s something we never say, but we can today, “don’t pay your taxes.” If the government is waiving interest and penalties on various taxes, hold on to that money to pay your bills and employees and pay your taxes later.
Many local and state governments are allowing later payment of certain taxes in addition to the federal government changing deadlines. If your bank or landlord is offering delayed or canceled mortgage payments, take them up on it. Or, negotiate for discounts. Perhaps legally you don’t have to pay your rent this month, but you still owe it. Will your landlord forgive 50% of this month’s rent if you pay half right now? Many other vendors may not have been willing to negotiate before Covid are now willing to negotiate, with either discounts, extended terms or payment plans. There’s no telling how long this will last, so cut any unnecessary cash expenses quickly.
Borrow from the Government
The federal government has announced a dramatic increase in SBA loans funding . These loans are low interest and we’re guessing that the underwriting criteria may be less strict.
The theoretical point of these programs is to get money into the economy to keep it flowing. Do your part by borrowing and then paying bills. Get your customers and suppliers to do the same thing.
Take Fast Action on Past Due Invoices
I’ll write more about this in the coming days, but now is not the time to let unresolved issues linger.
If you weren’t getting paid before, it is not going to get easier. It’s going to take escalated pressure to make things happen, whether it’s now during the crisis or when we come out of it. If you have run out of internal tactics to escalate pressure, it’s time to have a collection agency take over. The sooner we get started, the higher the likelihood you will recover something.
By engaging a collection agency, not only do you get the benefit of escalated pressure, this allows your staff (which may already be smaller than it was) to focus on paying customers and keeping your company moving forward. Plus, we don’t cost you anything unless we bring in the money you couldn’t get.
Connect with Your Community
No matter what kind of business you run, you are part of a larger community.
Think of ways to help contribute to your community. Maybe you have supplies you could donate to healthcare workers? Food you could donate to food pantries. Maybe your best way to connect is to simply offer a positive presence on social media.
At The Kaplan Group, we know this is a difficult time. We want to reassure you that we are here to support you. Our staff is fully functional while working remotely. Please, reach out and let us know how we can help.