Early in the week of March 30, the attorneys general from Nevada and North Carolina issued orders in their respective states to stop collection activities from third party agencies for the next 30 days. It appears other states may be considering similar orders.
So what does this mean?
First and foremost, if you are working with a third-party collection agency to collect on commercial or consumer accounts in either state, you need to ensure they are not making any further collection attempts until the deadline has passed.
But does it mean you cannot make any collection attempts at all? That’s where it gets a little fuzzy.
Right now, it does not appear that first party collections are impacted. However, how the attorneys general will view such attempts as the pandemic progresses is unclear. That’s why moving forward with care is important.
Communication and documentation will be key.
- Communicate expectations. Many suppliers are reporting customers are contacting them to extend terms. At this point, we are hearing that many businesses are choosing to hold the line on open invoices, making one-off decisions based on history and creditworthiness. For example, you may adjust payment plans for the short-term. If you chose to do this document the conversation. This may be as simple as reporting it in a shared document. This allows all internal staff to be on the same page.
- Know your credit policy. For that matter, make sure everyone in the company knows and understands the credit policy. If changes are made, make sure it documented and includes a date and time stamp. For example, one business is requiring companies to become current before they will discuss extended or special terms. It has been added to a special document everyone has access to that only deals with the changing terms.
Dr. Chris Kuehl is a Managing Director of Armada Corporate Intelligence. He provides forecasts and strategic guidance for a wide variety of corporate clients around the world. He is the chief economist for several national and international organizations including the National Association of Credit Management.
For a complete list of states that have stopped third-party collections temporarily, contact your BARR Credit representative.