August 15, 2020 is India’s 74th Independence Day and is unique due to the circumstances surrounding it. The past 5 months have been globally and nationally the most challenging with a pandemic, threatening the very way of life that we all got so used to. Is this the ‘new normal’? Work-from-home, Social Distancing, Lockdowns etc have had enormous far-reaching economic and financial consequences.
For B2B businesses, which rely on relationships, the pandemic has brought about a new set of challenges. Growth is at an all-time low and survival is key. While the attention is focused on staying afloat, one must not lose sight of an asset which most companies have: Outstanding Receivables.
It is so prescient in the Indian context that the lockdown was announced just one week before the financial year end of 31 March 2020. Traditionally, March and April are the highest collection months given that all parties are closing their books and want to settle all outstanding invoices. However, this year has been different.
So, what can companies, especially Sales or Collections departments do, to recover cash on old receivables?
1. Remind: Not all delays are due to wilful defaults. It is likely that in the lockdown confusion, your invoices could have been hidden in someone’s drawer. Since physical delivery of invoices may not be an option anymore, please send email reminders with a Digital copy of the invoice.
2. Collaborate: Your buyer has raised a query or dispute like incorrect quantities, rates or supporting documents. Your colleagues in Operations or Finance may need to help. Specific tasks will need to get created, assigned and tracked to completion.
3. Escalate: If your primary contact at buyer’s side has been un-responsive, (not responding to mails, nor taking your calls), you may need to escalate it to the next level in that organisation. Many times, people’s roles could have changed which, you may be unaware of.
4. Reconcile: Often, your customers claim to have already paid some invoices, yet your systems continue to show them as outstanding. This could be because these amounts are still sitting in your bank reconciliation statements. It is important to have a transparent exchange of information between the two accounting departments.
How do you achieve all of the above, while ‘Working from home’? Well, help is on hand with SaaS tools like www.kapittx.com which automate your entire Receivables process and help you ‘Unlock your Receivables’! Happy Independence Day!