The coronavirus pandemic adversely affected businesses worldwide during the past two years, resulting in a significant drop in their performance and revenues. Several companies even faced bankruptcy. The fallback of one organisation created a negative impact on other businesses as well, much similar to a domino effect. This economic crisis started with late payments.
By the time the common public and businesses had a chance to regain equilibrium, they were introduced to another Covid variant. This non-periodic and unexpected spike in Corona cases has been pushing down the pace of economic growth. Even in 2022, when the new Omicron variant knocked on our doors, companies and financial experts were expecting (or were certain) that late payments will again cause an imbalance in the businesses.
As per the Institute of Directors (IoD) report, more than one-third of directors agreed that they had experienced an increase in late payments during the pandemic. Yahoo Finance also mentioned some of the world's big companies that went into bankruptcy during the pandemic, such as Gold's Gym, J.C. Penny, and Brook Brothers. Companies like Thomas Cook and Carillion were underperforming, which negatively impacted the rest of the supply chain. Consequently, this continued to fuel the cycle of late payments.
By offering various schemes and plans, the government has supported businesses during the pandemic. For example, the Emergency Credit Line Guarantee Scheme (ECLGS) launched in May 2020 by the Finance Ministry of India aimed to provide relief to the MSME sector and other business enterprises amidst the global crisis. However, this scheme has been said to end on March 31, 2022. Similar to this scheme, other plans and offers given by various governments across the globe are approaching their expiration date. As a result, this has led to insecurity among several business owners. Therefore, the trend of late payments is seen not to vanish so soon and may continue to impact the world even in 2022.
Despite the government's best efforts, the ball actually lies in the court of businesses to efficiently manage the cycle of late and non-payments. Below we have discussed some measures that companies can take to fight this situation in 2022.
1. Being Proactive in Credit Management
Businesses should use the best credit control strategies to identify any signs of late payment. Also, companies should analyse well before offering credit to someone and use tools such as credit reports and account opening forms to manage the process.
2. Keeping Check Over the Cash Flow
Consistent cash flow is crucial for companies in sustaining their operations and workforce. Opting for credit insurance facilities and other funding schemes can be beneficial to ensure cash flow as it offers protection against late payments and bad debts.
3. Taking Actions for Debt Collection
Although a slight delay in receiving payments is a standard in every industry, outstanding amounts that are on hold for an extended period may remain unpaid. Therefore, partnering with an agency that provides excellent debt collection services can be really beneficial to ensure proper cash flow during such challenging times of the pandemic.
Businesses that are stuck in the cycle of late payments and look for a solution to get their amounts cleared in the fastest time possible should partner with a debt collection agency such as IDC Technologies. IDC has industry-specific experience and knowledge in speeding up payment from clients. Thereby, relieving the pressure on the in-house collection team and making businesses grow and sustain.