Minimize Client Loss Post COVID-19
Many clients will experience poor Q1 revenues. Some may experience possible business ending revenue issues. Clients will be looking to managing costs and will need to establish a plan to restore lost value and return to their prior profit levels. How can you protect your firm and help clients?
Proactively reach out to clients. You do not want the call from the new accountant asking for financial records because they needed to scale costs. Competitors will lower fees to open doors. Others will call because the bank is refusing to loan them money or their current loan covenants are in breach.
Protect your firm. You cannot help others unless your firm is financially protected. A record year can go bad quickly if you cannot collect and/or key clients leave due to eroding business. Take three steps:
- Bill now. Not after season. Send bills out quickly so you can get paid before a cash crunch hits.
- Collect aged receivables. Aggressively monitor open AR balances. Have a Partners and not an admin person call clients with aging AR. Partners are expensive, but we are not talking about costs. We are talking about the value of the relationship.
- List your clients by fee.
- Pull a list of clients and sort them by revenue from the highest to lowest.
- Review each one that make up 25% of the revenue. Call them all, but start with ones who may suffer more, i.e. restaurants, bars, transportation, hospitality. Ask how they are doing. If the client has an aging AR situation, take the time to talk about it. These are not easy calls to make, but that is a lot easier than losing a client or not getting paid.
- Examine the next 25%. You might be able to have some of your non-partner leaders make these calls to clients they work on. You need to teach them how to have this call.
- This will help protect revenue and those calls can lead to more work, i.e. budgets, forecasts, cost reduction ideas, etc. as well as referrals to their suppliers or customers.
What about the other 50% of your clients?
You will not have the time to give every client personal support. Do these simple things:
- Get surgical. Look at the remaining 50% of revenue and look for the obvious client type as discussed above. Selectively talk to ones who still have a higher level of revenue.
- Send a letter to every owner you do not call. Include simple steps about collecting cash, forecasting and budgets. Get them not to panic. Talk more about growth ideas rather than focusing on cost reductions.
- In the letter, offer to help. They might need someone to talk about what is happening. The letter will be appreciated and may be sent to some of their referral sources.
Time is essential. The temptation to wait until post 4.15 is natural. However, by that time clients may be hurting. It might be too late.