Like many of you, I’m taking several deep breaths as the business community carefully moves forward from a self-imposed 2-3 month hibernation. Stepping out carefully to adhere to the working normal, we are grateful for still being able to fully support our clients for their credit and collection needs. 

As credit professionals, our goals have always been to increase cash flow, expand sales safely, and minimize the risk of selling on credit. However, with the economy having come to a complete halt, maintaining these goals might have seemed like moot point. Without our organizations doing full scale sales, there was no product going out the door and no money coming in. But now that we are trying to resume our operations, allow me to offer a couple of ideas as to how we credit managers can help our organizations get back on their feet. 

Getting more involved in the sales prospecting process – When we think of prospecting, there is a tendency to imagine a search for new customers. The nice thing though is that there are probably many customers in your current portfolio to whom your sales team could probably sell much more if made aware of higher credit limits. For example, if you have a customer that was approved for $50K several years ago, and for a long time they have always purchased within that amount, you may want to review this customer’s current credit worthiness. You may find through your credit research tools that over the years they’ve become more profitable, and if offered, would purchase up to say $100K from your company. In other words, rather than waiting for your sales team to ask you to approve more credit, by informing them in advance that they could sell more to particular customers, you are turning the credit department into a proactive vehicle for sales facilitation and expansion. 

Helping to bring past customers back to life – As part of bringing credit files up to date, credit managers will often come across customers that haven’t purchased products in a year or more. Although there’s a tendency to put these accounts in a closed file drawer, sending a list of the accounts over to the sales team may trigger a renewed interest in approaching those customers. Some customers that started out buying regularly but then slowed or stopped may need to be contacted by your sales professionals in order to find out what happened. Sometimes there’s a problem that went unattended or a competitor that filled in a gap. Whatever the reason, when the credit department, through its work, can bring certain stagnant accounts to the attention of the sales department, this may help to bring a few of them back to life. 

Financing your receivables going forward – One of the things I believe you’re going to have to do to support your clients, old and new, is to extend payment terms. Due to the economic shut down, getting back to normal is now a “new normal.” This means that the sales and payment terms of the past may not be a good fit going forward. In order to facilitate extended payment terms, perhaps out to 45 or 60 days, financing your receivables may be a good option for you and your customer. With interest rates very low and financing companies very eager and competitive to accommodate your needs, this is one cash flow tool you should very well look into. 

Offering one-time discounts on current A/R – A receivable from March that is normally due in 30 days, may still be open since your customer was closed for a couple of months. On a case by case basis, if you have several customers who have been long term timely payers, you may want to offer them a one-time significant discount. This reduction should be enough to incentivize this select group to take advantage of the offer, which in turn, if accepted, will get your cash flow flowing.

As we get the gears of our organizations turning again, I hope the above thoughts will be of value to you. 

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This article has been edited by Steven Gan

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