Credit management in the age of corona

Everyone who is affected by the corona crisis is trying to keep their head above water and seeking to keep losses to a minimum. As a first reflex, you might try to collect unpaid invoices as quickly as possible - but is that really a good idea in these times? Is it OK to go after your money, knowing that your business partners are having a tough go of it as well?

If you’re asking yourself this question, then in any event you have a strong empathic ability and you also have an eye for the human side of the story, but is that really wise?

3 important objectives

In normal times, credit management has the following objectives:

1. Guarantee that your invoices, charges, premiums are paid

2. Don´t harm the customer-supplier relationship

3. Be proactive so as to receive the future payments in a timely manner

It is especially the second objective that is sensitive right now. After all, you do understand that your client is strapped for cash as well. You want to collect your invoices as responsibly as possible, but how do you go about it in the current situation?

We found several interesting recommendations on the website of the Institute for Business Development and we summarise them for you here:   

Recommendation 1: 

Don´t use a standard e-mail, but instead contact your customer personally. Tell your story and listen to that of your customer. In so doing, try to arrive at some concrete agreements.

Recommendation 2:

Don´t lose sight of your goal: collecting your invoice. Don´t let yourself be (mis)led by sympathy, but do show sufficient empathy. These are two different things. Empathy is based on reason, sympathy on emotions. Through an understanding attitude you will react correctly and nevertheless try to achieve your objectives. "I understand you … These are really hard times" or even "jeez, that's gotta hurt" are phrases you´ll be using a lot right now.

Recommendation 3:

Make no distinction between B2B or B2C. Right now it is above all Human 2 Human. Listen to each story and let the agreements made depend primarily on each individual situation, rather than on the type of customer.

Recommendation 4:

If the foregoing doesn´t help and you cannot achieve your goal, it’s still always OK to turn to a third party for the collection of the unpaid invoices. Various collection agencies, process servers and lawyers have already adapted their approach. Summonses cannot be served at the moment, but the amicable phase is still possible. Be sure to make clear agreements with your partner about the approach you want them to take: shoulder to cry on or tough love?