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Covid – One Year On

Posted: 15 Apr, 2021

As credit managers and credit controllers reflect on the challenges in managing their sales ledger asset over the past 12 months, we look at the various issues faced and how we expect that has changed the support needed from your credit control team moving forward.

The Good News

  • Prompt payment practice has been given highlighted focus
  • There are a number of large businesses supporting smaller suppliers by making early payment or temporarily shortening payment terms
  • Good credit control has become the key focus for businesses
  • There has been a greater business involvement in the credit control function with more support given by sales and customer service teams.

The Not So Good News

  • Some customers have issued blanket payment suspension to suppliers due to lack of trading activity
  • Extended terms have been taken by customers with no defined date for return to normal terms
  • Discounts have been requested for stock supplied not sold due to the impact on trading levels
  • Credit risk management has become more challenging due to the unprecedented covid impact
  • Customer business closures and remote working accounts payable teams meant communicating with customers has been challenging for credit control teams

What Should I Expect my Credit Control Team to do?

Whilst many sectors expect to see a bounce back as the economy re-opens, it is extremely important that credit control teams continue to keep close to their customer base and understand the challenges faced that may impact upon the customer’s ability to make payment to agreed terms.

Credit controllers will need to…

  • Keep up to date with both industry and regional news so they know what challenges their customers may be facing. Seeking current data will enable them to keep pace with the expected speed of change in business trading as the industry sectors open up for business.
  • Revisit terms which may have been agreed with customers during the pandemic. If it has been previously agreed for the customer to take extended payment terms at the start of the pandemic, these need to be revisited on an ongoing basis. Either to confirm when normal payment terms will be resumed or to revise contractual terms to enable the extended payment terms to continue, with some form of financial compensation for the supplier. Covid – One Year OnCovid – One Year On
  • Regularly engage with customers that have issued blanket payment suspension letters and obtain a commitment for payments to re-commence as the economy re-opens
  • Consider the company credit policy and risk appetite when looking at future supply to the customer if they have taken extended terms or have significant overdue balances
  • Keep abreast of the Government guidance and recommendations around taking legal action to recover a debt, bearing in mind any delays due to the potential backlogs of claims in the legal process
  • Ensure queries are managed, reported and resolved promptly to avoid any unnecessary delays in payment
  • Manage instalment arrangements and agree with the customers the late payment and interest charges that will be applied to the repayment plan 

Over the past 12 months, our clients, covering a wide range of industries, including fashion retail, logistics and manufacturing, have experienced their own sector challenges. Whilst we have seen some common themes for delayed payment reasons, there have been specific sector challenges which we have worked with our clients to overcome. As clients have diversified their product ranges, we have been able to leverage our industry experience and assist our clients to ensure an early understanding of client billing and payment systems, particularly in the healthcare, food and fashion retail sectors. These are, without doubt, challenging times for anyone involved in credit management and if support or advice is needed, there are specialist credit professionals who are there to help you.

Contact Us

Please call our team and talk confidentially and informally to one of our expert advisers about your requirements and objectives.

Phone: 0330 2232525 We are based at locations in and around: London, Southampton, Milton Keynes, Birmingham, and Manchester

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