Man using calculator and managing his accounts receivable
Betsy Wise
By: betsy_wise
Read in 10 minutes

How to Manage Your Accounts Receivable During a Crisis

Fear of the unknown causes customers, employees, and the public to act differently during a crisis. It’s a normal reaction when members of a community face a hurricane, an epidemic or something else that has a global impact.

Having a crisis preparedness plan in place provides practical solutions when life isn’t exactly normal. When you include an emergency plan as part of your formal business plan, you’ll know how to make financial adjustments should the need arise.

Business, as usual, is a real possibility when you follow concise and actionable tips like these to manage your accounts receivable and continue receiving payments from your customers during a crisis. Your goal is to establish guidelines that favor not only your customers but keeps your business operating optimally.

10 Tips to Manage Your Accounts Receivable During a Crisis

  1. Check-in with your customers: During a crisis, it’s hard to know who may be affected by a disaster. Get a quick update on how they’re doing and offer your support. Your genuine concern is what customers remember when things settle down.
  2. Establish the amount of time you can extend to paying customers affected by a crisis: Depending on the extent of the crisis, customers may not be able to work temporarily and can’t earn wages. If they can’t pay their account balances on time, you can extend payment terms for 2 weeks. Evaluate each customer on a case by case basis based on their circumstances.
  3. Offer payment plans: Give customers several options to pay their bills. Find out what amount is comfortable for them to pay and accept payments as you normally would whether customers pay by check, cash, money order, or credit/debit cards.
  4. Don’t extend revised payment terms to everyone: You’ll know when you contact customers whether they’ve been affected by a crisis. If they haven’t, keep billing them the same as always without changing their payment arrangements.
  5. Follow up with correspondence: Once you set up a different payment agreement with customers, send them a letter confirming your conversation and enumerate the details. For example, spell out when their next payment is due and the amount. As a way of encouragement, this is the perfect time to offer them a discount on your products or services when the crisis passes.
  6. Enter payment information in each customer’s profile: With a lot going on during a crisis for both customers and businesses, it’s important to track payments. Adjust your accounts receivable to reflect the agreed-upon payment of each customer. Then, send out bills as usual which reflect the new payment agreement. Keep thorough notes in each customer file to avoid discrepancies. If you haven’t invested in an automated online accounting system, now is a good time to do so. The system can send you reminders when customers haven’t paid their bills so a staff member can follow up with them promptly.
  7. Don’t add late payment fees: When people are trying to get back on their feet or adjust to new circumstances, as a courtesy don’t add late payment fees. Keep in mind, this is only a temporary measure. You can resume adding late payment fees in the future. Customers will appreciate the compassion you offered to them during a hardship. They won’t forget your kindness.
  8. Accept upfront payments: If someone is affected by a crisis but has the money and offers to pay their bill in full, gladly accept it. Some customers feel more at ease when they can pay their bills which frees them up to tackle other challenges. By accepting their payment, you help them move forward and at the same time, you keep your cash flow from dipping too low.
  9. Review your accounts receivable more often than usual: During times of decreased cash flow, you’ll need to review accounts receivable and your accounts receivable turnover more often. By doing so, you’ll be aware of any tweaks you need to make in your finances.
  10. Keep making deposits to your savings account: It may be necessary to make withdrawals from your savings account to cover working capital shortages. Even when making withdrawals, keep depositing similar amounts that you routinely add to a savings account.

Along with monitoring your accounts receivable, it’s a good time to take a close look at your expenses to make sure you aren’t spending money unnecessarily. Then too, you can get rid of non-core assets: these types of assets are ones no longer needed by your company to operate. Examples include vacant land or old equipment not being used. Depending on your financial situation, some business owners sell stocks and bonds to raise cash.

Keep reading: What Is Free Cash Flow

Create a Cash Cushion to Mitigate the Shortage of Cash During a Crisis

It’s a fact: many of your clients are not able to pay upfront in regular circumstances. During a crisis, it’s only natural that the payments you expect will be delayed even more. That’s why it’s important to be prepared and ensure your business has a steady flow of cash.

In other words, you have to take measures to capitalize on your business during uncertain times. A business loan can provide your business with the funds it needs to mitigate the impact of cash flow shortage during a crisis.

Our members at Camino Financial know it. They have obtained small business loans with us, with optimal conditions. Thus, they can be sure they have the cash they need when they need it most. You can be the next one before the crisis affects your business.

You can use one of our business loans as a bridge loan to overcome the lack of cash until the situation goes back to normal.

What is a bridge loan?

A bridge loan is a business loan with very short funding time that gives you access to capital at a critical moment. That way you can meet the immediate financial obligations of your company without suffering from a shortage of cash. In other words, it is a financial “bridge” that allows you to cover your short-time cash flow needs while waiting for long-term funds.

These are some of the most relevant features of our business loans:

  • Fast funding. You can know if you prequalify immediately. If your loan application is approved, you can receive your funds in 2 business days. This point is critical and sets us apart from other lenders. By obtaining financing in such a short time, you will be able to capitalize on your business without suffering the effects of a crisis.
  • Fixed monthly payments for 24 to 36 months. This is a longer and more favorable payment period than the one you may receive from other lenders, who require daily or weekly payments over a period of 12 months or less.
  • No collateral required to secure your loan.
  • No prepayment penalties. You can pay off the entire balance of your loan whenever you want.
  • Flexible requirements. You don’t need a minimum credit score or credit history to apply for a loan. The loan approval is easy and fast. You don’t have to go through loops to get the loan you need right when you need it.

The time to act is now. Request a loan quote today: your business could obtain the financing it needs in just a few days to avoid the impact of a crisis and position itself properly.

Calm Assurance During a Storm

Facing challenges is part and parcel of running a business. By remaining calm, you help your customers get through a crisis and build goodwill with them. When a crisis subsides, your customers will remember that you truly cared about them. They’ll reward you by continuing to buy your products and services.

Likewise, Camino Financial cares about its members and stands with them whenever they encounter less-than-desirable situations. Remember, our staff is available to answer your questions and listen to your concerns.

We encourage you to subscribe to our special Coronavirus Newsletter (in Spanish only) which provides relevant information, key resources, and other practical tips when going through difficult times.

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