As we enter 2021 navigating the aftermath of COVID-19 and its impact on businesses, you can expect to feel uneasy and uncertain. Things look a little different: business has been paused, disrupted, and in some cases, devastated. Perhaps this is an opportunity for your credit department to shine…
Tips for Keeping Up Cash-Flow
Your collections team is vital when minimizing the impact to cash flow, creating agility in working capital, and bolstering customer relationships. The best credit response is to boost communication and a philosophy of “no surprises”. The customer partnership is a marathon, not a sprint – how you communicate with your customers now will influence future habits. Here are a few ideas to help your credit group keep the cash-flowing.
Focus on thoughtful interactions with customers with a goal of supporting long-term relationships. Share store hours, product availability, payment expectations, and resources to ensure a long-term relationship. Most importantly, stay empathic, transparent, and honest as you navigate this together.
Pay Attention to Current Best Practices
When trying to keep the cash-flowing, it is important to remember credit current best practices. Always pay attention to the following:
- Manage credit limits. Make necessary changes but limit over-exposure.
- Be clear. Bill as usual and send invoices and statements with clear due dates.
- Watch for changes in payment habits. Take note of expected payments that are missed and take action when warranted.
- Listen to your customers. Call customers to listen and understand their circumstance drivers. Do not make assumptions or excuses- instead, offer help and resources and set a payment plan.
- Keep records of customer contact. Notes are critical if you find yourself in a legal escalation or remote working environment.
- Use joint check agreements. Consider taking deposits or prepayments to manage exposure.
- Know your customer. To follow the project money flow, you must know your customer and your customer’s customer.
Staying up to date on credit current best practices will help make your credit job easier, more enjoyable, and more rewarding. The best practices list is there for a reason- use it.
Maintain Lien and Bond Rights
Why is it important to maintain lien and bond rights? Lien and bond rights can make or break cash flow to any company- if you have a customer who hasn’t paid, make sure to maintain lien and bond rights. Always do the following to ensure lien and bond rights:
- Insert yourself into the construction project money flow;
- Stay mindful of lien/bond filing deadlines;
- Send preliminary notices; and
- Use online resources available to you.
By maintaining lien and bond rights, you can protect your company’s cash-flow and your personal pay.
Help Your Customers Secure Themselves
One of the biggest jobs you have in the credit industry is helping your customers secure themselves. Although you cannot provide legal advice, you can still share public information with your customer- this can include required filing timeframes and copies of notices and/or liens that you are filing. Discussing these subjects in advance with honesty enables your customer to protect themselves in the project money flow. Helping your customers protect themselves might be the most valuable service you give them.
Say “Yes” to Payment
Continue to make customer collection contacts and negotiate partial payments or payment plans. Remember that tone is important for phone calls and emails – always look for ways to keep conversations going and to say “yes”.
Get Current on Industry Events
This is the perfect time to advance your knowledge of your industry so you can respond to current happenings and events. Who is landing work and what type of work is it? Who is working for who? Where are bonds, mechanics liens, and bankruptcy being filed? Start with LinkedIn and follow your competition, industry groups, and your peers – there is a wealth of knowledge just waiting to be tapped.
New Year, New Cash-Flow
Navigating the new year in the business world post COVID-19 might be difficult, but we hope that your credit group takes the opportunity to shine by keeping up cash-flow. One thing that we all have in common in the need for cash-flow… shine bright, credit team, and lead us into the new year!
About the Author
Jennifer “Jen” Martin is a 25-year veteran of the building materials industry and a strong advocate of the “credit is an extension of sales” philosophy. She earned a BS in Business Management with honors from Regis University, is pursuing her MBA and serves as a Member of Levelset’s Credit & Industry Advisory Board. In her current role as Senior Director of Credit & Accounts Receivable for Kodiak Building Partners, she is focused on charting a new path to receivable and collection excellence by empowering local credit professionals to excel at credit best practices while keeping decision making close to the customer.
Jen lives in Castle Rock, Colorado, with her two children and two quirky cats, where she enjoys beautiful mountain views, conversations, and cocktails around the firepit through every season. You can keep up with Jen and current credit best practices by following her on LinkedIn.