Before COVID-19, many businesses across multiple sectors were already facing financial difficulties. Whether from poor performing sales, zero hour contracts being taken away from businesses that benefited from them and minimum wage increases. So the impact of a pandemic coming on the scene was always going to be extremely damaging.
The coronavirus saw a swift and immediate change to debt collection. Creditors implemented payment freezes, agreed extended time to pay arrangements, as well as in many cases pausing collections activities entirely. This resulted in a significant reduction in debt collection and monies being recovered.
So, what happens when we move into the "new normal"? Inevitably we'll see a large drive back to debt collection methods driven by the backlog of debts built up and more businesses will struggle to manage their creditors. Notwithstanding the fact that many businesses will go into liquidiation after the government furlough scheme ends in October. Nobody really knows the extent of the impending surge of business wind-ups and further financial difficulties. Therefore businesses must make the best decisions possible based on experience and survival instincts.
Expecting to move from an unprecedented global crisis to a period of stabilisation and then hopefully recovery has no clear path to it from the the new normal now and over the coming months. Therefore all sectors will need to be flexible, change how they work, how they sell and being sympathetic towards debt management strategies. This is both from the creditor, debtor and debt collecter standpoints.
Changing the framework
So how will you help your debtors and in turn help your business debt recovery? A fair, responsible and sympathetic approach to debt management will be more important than ever over the next 5+ months. The government will need to collect monies owed in order to fund services and help with economic recovery. People and business owners will therefore need to be treated compassionately throughout this process. Keeping in mind the new Corporate Insolvency and Governance Act 2020 that came in on 25th June 2020 and the new guidelines around collection methods and moratoriums.
How analytical data will be used to identify consumer and business debt status, their abilities to pay, as well as their financial circumstances will become extremely important for debt collection strategies. Ensuring there are different repayment methods for those severely affected is a proven method to ensure a positive collection result for all parties concerned.
From Credit Control UK's point of view, professional courteous communication is crucial. Listening, understanding, being sympathetic to the debtor whilst finding a workable repayment solution will be the only way to complete a successful debt collection strategy in this new normal. Since the beginning of the coronavirus, we’ve seen a plethora of positive attitudes towards change, towards the way we work at home, how we treat others, how we help people outside of our immediately household. Whether by phone, on the doorsteps clapping, giving money to charity by an app or raising money by walking in your garden. This has certainly helped to build a better relationship framework amongst the UK, which in turn wil help find solutions to recover debts.
For the SMB industry, we need to offer longer and more flexible payment arrangements to support the changing financial situation of businesses, such as a reduced payment plans, longer arrangement periods to pay off debts, further payment holidays or even no payments at all but with a strict agreement to stay engaged. These methods to enable further grace periods will help companies either trade out of financial difficulty to repay debts owed or assist with personal arrangements to satisfy creditor demands for debts to be paid.
To get your invoice debts collected effectively as well as manage your creditors unemotionally throughout the Coronavirus pandemic and keep your business afloat, speak to us on 0208 720 7309 or email firstname.lastname@example.org. You can also access COVID-19 specific credit control support at https://www.creditcontroluk.co.uk/coronavirus-debt-support.