How to Maintain a Steady Cash Flow During the COVID-19 Crisis
Every business and every person throughout the world is witnessing the effect COVID-19 is having on the economy. While it is important to be there for your customers, it is also important to have a steady cash flow and ensure you do not run low on reserves.
Here are a few invoice practices that can help you maintain a balance.
Communicate clearly with your customers
The majority of your customers are making difficult financial decisions at this time, and they may or may not have questions regarding cancellations or refund policies. Provide clear communication to your customers at this uncertain time, and not only address their questions but also build trust. Offer a self-service portal where your customers can log in and view their transactions, making everything transparent as possible.
Come off as approachable
Provide your customers with a quick and easy way to contact you, in case they are having trouble with payments. This extends to cancellations as well. If you include all your contact information in your reminder emails, it will make things as transparent as possible. If a customer is choosing to cancel the service, having contact with them will give you the opportunity to find a solution and save your business from losing the customer. When you come off as approachable, you are taking advantage of these opportunities!
Remove any strict deadlines
Like you, many of your customers are focused on keeping their family and loved ones safe at this time. Therefore, your estimates might be accepted a little later than usual, and your invoice payments may come in at a later date. Instead of bombarding customers with multiple reminder emails, consider relaxing these deadlines for a little while.
Allow partial payments
In times like this, getting every invoice 100% paid on time is not a reasonable request. If your customers are willing to make partial payments rather than a bulk single payment, you should be okay with this and understand that it will allow you to maintain steady cash flow.
Ding! Ding! Ding! If your business is struggling with cash flow, consider factoring your invoices. Your business can get paid a reduced amount upfront by a factoring company such as Alliance One, who can then collect payments from customers when they are due.
Offer credits and discounts
Be as understanding and lenient as possible. Offer a discount for outstanding invoices and give them a break. This proves that you care about your customers. Alternatively, you can offer credits to be applied to on their next subscription renewal.
Pause and do NOT cancel
With all that is going on, it is only natural that your customers are starting to cancel some of their services To keep them from churning permanently, provide an option to pause their subscription for a while, instead of canceling altogether. Alternatively, you can extend their next subscription renewal date by a month or two without charging the customer. Think carefully about offering this, because you may or may not be able to afford to offer services free of charge.
Write off invoices in special cases
Perhaps you have a customer who has been severely impacted by the COVID-19 pandemic. In this case, you do have the option to collect partial payments and write off the remaining invoice amount. Although writing off an invoice is the last resort, it is an option. Ensure you do not write off too large a portion of your receivables.
Increase credit limits for loyal customers
You probably have a customer or two that have stuck with you for a long time and throughout the COVID-19 crisis. You could thank them by increasing their credit limit and allow them to know that you want their continued business.
Know why your customers leave
Sometimes no matter how hard you try, you still lose a customer. If a customer chooses to cancel their subscription or services, ask them to give a reason. This information will not only help you understand your customer trends but also reduce churn. Depending on the reason they canceled, you can have your customer support or retention team give them a call and try to win them back.