Today, the whole world is lying under the grip of COVID-19. It’s not the health that is suffering the most, but the global economy is also suffering. Different governments around the world have taken severe measures to control the spread of this virus.
Countries worldwide are in lockdown; family gatherings are restricted, events are canceled, salons, the hospitality sector is either partially operational or permanently closed. Wholly, this highlights that countries are affected a lot due to the pandemic crises.
As the health of individuals is of utmost priority, several measures related to health are strictly adopted. On the other hand, COVID-19 has also caused financial problems to some of the giant’s economies worldwide.
Debt collection during the COVID-19 pandemic
Due to the COVID-19 pandemic, financial problems are arising despite the government’s tremendous efforts in offering support to the companies. However, a point to consider is what should be done if a particular customer has no financial means to pay back your invoice? In case they have been declared bankrupt.
Initially, this should be kept in mind that all the companies are struggling hard to pay all their invoices at the exact time. Due to the slowdown across the global economy, companies might suffer from a lack of liquidity. Therefore, debt recovery may also rise, and a few companies are operating correctly.
For any company, receiving timely payment is of utmost importance. It is why every possible effort has to be applied to have a higher amount of debt collection. Therefore, necessary steps have to be taken in these COVID times. Businesses can also take the assistance of outsourcing companies to get all their debt collected.
Role of creditors
It is quite simple to think that seeking to recover debts will cause harm to the reputation to a creditor’s business, especially in these pandemic times where several debtors face severe financial pressure.
On the other hand, few debtors seek to grab higher financial assistance to cover up their financial debts and make their business activities to an end. Therefore, it is essential to consider a debtor’s priority before sticking to a particular decision. It will help you build a long-term relationship with the debtor if you cooperate with them during the pandemic.
Agree on payment arrangements?
If it seems right, creditors can look to agree on payment arrangements with the debtors. However, this has to be closely monitored. The circumstances might change, and even another approach could be for both the parties (if it seems that the debtor is no longer capable of paying).
Maintain and operate up an ongoing dialogue with debtors.
Communication is the highlighted aspect, and working together will support parties to search for practical solutions that offer continuity to the business for due sides shortly.
To emulate the risk of communication breakdown, creditors should avoid debtors when trying to reach out to them. Additionally, make sure you have the telephones, emails, and addresses of the respective debtor. It will ensure a smooth flow of communication between two different parties.
- Try to solve dispute as early as possible
- Always make sure you have written confirmation of your claim.
- Be well versed about agreements with creditors
- Know about such companies which are dividing into Viable and Non-Viable parts.
- Credit rating could be difficult
- Retention of titles must be strictly used.
- Try to ask for some additional securities.
- Be sure and clear about matters which cannot be guaranteed by you.
Seek legal advice?
Suppose a creditor is worried about the debtor’s ability to pay. In that case, the one-stop solution is to obtain professional advice to reduce the risk of time-consuming and expensive obligations soon. Ultimately, tensions related to the payment as well as unknown litigations can be drastically reduced.
Nowadays, the government is supporting and having sympathy for the businesses which are struggling a lot. Creditors should also note the government guidelines to find some quick solutions with debtors and make the matter closed soon and have a sustainable business.
Also, some creditors have cash flow issues due to the COVID-19 lockdown. Additionally, some organizations opt for accounting outsourcing service providers who can help with debt collection so that they can focus on the core business operations. Are you looking for debt collection services?
FinAcc Global offers all-inclusive accounting outsourcing services for all types of businesses. Connect with us to know more about how we can help you with debt collection services.