Collecting cash in a crisis by Laura Ferrie
Whilst we are all trying to navigate our way through the situation created by the Covid-19 pandemic we wanted to offer some practical advice and give you the opportunity to take advantage of our many years’ of experience in this field. Some of us are choosing to up the yoga, meditation and mindfulness to survive the lockdown and others are upping the biscuit, crisp and wine intake to reach the same goal. Whichever category you fall into in addition to worrying about our health and the health of those we love there is another worry for us all … money.
Sadly I am old enough to have seen the impact of a number of recessions over the years and have the skills and knowledge to help clients come through this. At this point no one knows exactly what the financial impact of the pandemic will be on the global economy other than to know it will be damaging but there are small, pragmatic steps businesses can take to try to lessen the impact. So, as the dust begins to settle on what is the new normal for us all it is time to look at how, practically, we are going to get ourselves and as many others as possible through this; both in terms of our health and also financially.
These difficult times call for some inventive measures to collect cash outstanding to our businesses. The normal "See you in Court" response to a reluctant payer is not going to help much at the moment.
The legal mechanics of the Courts, enforcement agents and process servers are all impeded by huge workloads that have built up during the months of closure or severely reduced ability to work. There are substantial delays at the Courts still as the struggle to deal with the backlog.
The relaxation of the wrongful trading laws and the deferment of insolvency action contribute to the reduction of collection tools available to the creditor. It’s a part of our job to keep abreast of the changes in the law and to keep our clients appraised of the impact on them.
So, as demonstrated there are clear and obvious problems with the practicalities of attempting to use the legal process to recover money; the statutory tools useful for collecting money are simply not available to the creditor during the current crisis.
Then there is the moral issue. Does the creditor want to be seen as the "big bad wolf" hungrily knocking at the door of the debtor? I would venture to suggest that in these times most reasonable Finance Directors and Credit Control Managers would say not.
We are all seeing stories on the news about the impact on companies that are laying off staff, the effects on those staff and their families and even if we are not being directly impacted at the moment these situations are future worries for all of us at this time.
The Government is offering assistance to businesses of all shapes and sizes. Whatever political colour we may be there is no avoiding that the extension of time that the government is offering for payment of VAT, self-assessment liabilities, 12 month interest-free business loans as well as some grants are helpful and may provide a welcome life-line.
The building societies, banks and credit card companies are offering payment holidays to its customers, again, many will find this welcome and helpful.
With so many measures in place to help anyone that is owing money should the business creditor sit on its hands and take no action with trade debts? Of course not.
What we are able to do is weed out the genuine “Can’t pays” which will undoubtedly increase from the “Won’t pays” who will definitely attempt to take advantage of the current position. My experience and that of my staff enables us to tell one group from the other. We will set up realistic and monitored payment plans for those in genuine need of time to pay and make sure that they adhere to them. We will put pressure on the other category to get your cash sooner.
It is an undeniable fact (and one that drives my current clients mad) that sometimes just the introduction of a third party will have the desired effect but in many other cases our tenacity, knowledge of the law and expertise along with decades of experience in our area all come into use and we can brings our customer’s cash in quickly.
My top tips for collecting overdues before getting to debt recovery stage would be:
- Talk to your customers – Painfully obvious but it surprises me how many of my clients have no meaningful dialogue with their customers once they have become debtors
- Credit check more than usual
- Seek personal guarantees from limited company directors where you are not happy with the position of the company
- Use the Land Registry to check if directors giving PGs own their property. https://eservices.landregistry.gov.uk/eservices/HomePageRouter
- Monitor, monitor and monitor again (always good advice but more so at the moment)
My co-director and I have more than seventy years combined experience in credit management, debt collection and the law pertaining to debt and insolvency, we have the inventive measures necessary to assist your cash flow. In Spring and possibly Summer 2020 it is so important to try everything to collect your money without going to Court and we can help you do this, please give us a call on 01992 414222 or email me on email@example.com. We may just have the solution to your problem