After what is beginning to feel like endless roadblocks and barriers to our economy, the strain is showing everywhere. Unless your business operates on one of the few models that benefit from a pandemic, chances are you (and your team) are feeling weary and exhausted.
With more virulent COVID-19 strains slipping into America’s communities while vaccine delivery hits new barriers and case counts continue to rise, most of us are looking forward with a mix of optimism and concern. It is becoming clear, despite what anyone wants, that the real recovery is many months away.
As entrepreneurs and business leaders, we remain a far cry from predictable times. And what’s worse is that many are operating in ways that exacerbate, rather than minimize, their level of risk.
Take a look at these three risk factors I’m seeing consistently, and consider your own approach—then take my advice to implement change:
- Burying Your Head in the Sand. The single biggest contributor to bad debt write-offs is procrastination. Even during periods of economic growth, by the time many businesses flag an account as a problem, it can often be beyond recovery. During a financial crisis like this, 60 is the new 90. Tighten, rather than loosen your standard timeframes to be ahead of the pack when an account is struggling to pay. It’s important to perceive recovering debt as a race against other creditors, where anyone but the winners will miss out big-time. Clients who send us overdue accounts promptly are seeing dramatically faster results and a high rate of success than those who wait. Get your head out of the sand and back into the game!
- The Sunk-Cost Trap. Experts in behavioral economics remind us that humans have a hardwired but illogical inclination to focus on prior efforts and expenses, despite that we would be far better served to invest our energy in creating future successes than on trying to extract value from the past. When you send an account to your collection agency, you can achieve the best of both worlds—maximizing your Net Back while returning your mental focus to the skills and expertise that create future value.
- Resistance to Change. Many businesses that are already recovering from a significant impact are succeeding through reinvention. Meanwhile, those struggling the most are the ones with a “wait with fingers crossed” recovery strategy, merely hoping things return to the way they were before the economy went into the dumpster. News flash: the world is different, and the future will in many ways never resemble the past. The best time to find a place for your business in this new normal was a year ago. The second best time is now.
If your business is putting off dealing with cash flow issues, focused on sunk costs or if your recovery plan is heavily reliant on bygone strategies, you urgently need to make changes.
President and CEO of MetCredit USA, America’s debt collection and accounts receivable recovery agency.Go to LinkedIn