Plus, three changes we are expecting to see this year...
It's safe to say that the way all of our lives have changed in the last year has had a huge impact on businesses. The majority of office workers are now working from home and companies are relying on things like cloud accounting more than ever. While it's taken some adjustment, it's safe to say that many businesses may be sticking to this way of working for the foreseeable future.
The pandemic has also caused issues for many businesses as they deal with their own financial struggles alongside the difficult task of chasing customers who don't have the money to pay at the minute.
Thankfully, with vaccines being distributed at an incredible speed, the end seems to be in sight, with a certain level of normalcy for people and businesses expected at some point this year. However, what has 2020 taught us about credit control for businesses and how will that change things going forward?
Here are three changes we are expecting to see:
1. Businesses focusing on late-paying customers
If the pandemic has taught us anything, it's that things can change pretty quickly for businesses (especially small businesses) and therefore it's important that business owners don't become too lenient when it comes to waiting for payments from their clients.
While some level of flexibility can support relations with clients, certainly regular ones, it's easy to get into the habit of waiting weeks, months or more to receive full payment depending on what type of product or service you are offering. While it's important to take each transaction or business deal on a case by case basis, a certain level of automation needs to be implemented for businesses to be able to regulate their payments and chase late payers.
This can be done with ease through services like Credit Hound by Draycir. This credit control software automates many of your day-to-day credit control processes and is designed to pick up where your existing accounting system stops. It significantly reduces administrative tasks and instantly shows how much you’re owed and who you need to chase.
By streamlining this information and making it accessible to you, you'll be able to easily keep track of who owes you, what they owe you and how long it's been since you've sent your initial invoice or chased them up.
With Credit Hound at your fingertips, you'll be able to chase payments much easier and therefore get paid earlier; this especially comes in handy with customers or clients you know usually leave it to the last minute before paying you. Credit Hound is able to provide this service on both a local and international scale.
Getting paid on time means more money in your business account. Whether it's needed to pay staff or make a much overdue purchase for your business, you'll be able to do so.
Businesses have really struggled over the past year and a tool like Credit Hound can allow them to speed up cash flow.
Another great aspect of something like Credit Hound is being able to notice patterns when it comes to who pays on time and who doesn't. This issue leads us to the second change we may be seeing going forward in regards to credit control.
2. Businesses being more selective when it comes to clients
After having to adapt to so many changes this past year, it's safe to say that we are all appreciating the importance of good communication skills more than ever. Communication between businesses and clients is no exception.
While putting up with late-paying clients may have been something many businesses were willing to do before 2020, the pandemic has really shone a light on how much of a negative ripple effect bad clients can create. From their late payments causing hold-ups in other areas of your business to their lack of communication creating hours of back and forth, there is a lot that can go wrong when doing work for a client or customer like this.
Now that the pandemic is slowly moving behind us, we feel that businesses will be far more selective with their clients going forward. Those businesses which have the luxury to do so, will likely try and grow their relationships with reliable clients while not accepting future work from those they have a bad history with.
This is completely understandable, with businesses on tenterhooks for the foreseeable future. Strengthening ties with those who make payments on time is vital now more than ever.
3. Businesses choosing security over projects that force them to branch out
While this is similar to the previous point, it's an important factor to mention when discussing the potential changes to businesses in 2021.
The struggle between security vs growth is an age-old decision when it comes to owning a business, but now more than ever, this is something that owners are going to be taking into consideration a lot more.
It may be natural for businesses to want to branch out into ventures outside their regular day to day work by taking on these types of projects, however, we may see that it's the more familiar projects that businesses are looking for this year.
With many businesses struggling to get back on their feet after months and months of different lockdowns and tiered restrictions, their main focus may be completing regular work and avoiding big projects for the time being. If this year has taught us anything, it's that three smaller jobs which have already paid are worth far more than one big contract that hasn't.
The pandemic has made changes to almost every aspect of how businesses run and it appears that how they deal with credit control has been swept up in this. This will likely involve businesses being more selective with projects and certain clients, but with tools such as Credit Hound, this new way of accepting and chasing payments can be made much easier for them.