How to make the debt collection process more straightforward

With the pandemic having such a devastating impact on so many areas of people’s lives, from employment to health, we’re currently heading into a period of economic difficulty. The poorest half of the UK’s population have seen their disposable incomes fall by an average of £110 since the beginning of COVID and an extra 300,000 people have fallen into poverty.

Although measures, such as the furlough scheme, were designed to protect millions of employed people, those with less stable jobs were more likely to fall through the cracks. This has created an entire demographic of people who received little to no help.

Consequently, the collections process is set to become more crucial, yet more difficult, than it has been since the 2008 economic crisis. In this article, we explain how to make collections simpler and how Sigma Connected can help your business overcome the biggest arrear collection hurdles today.

Top tips to make the debt collection process easier

1. Give your customers the freedom of choice

Compared to other generations, millennials’ (people born between 1981 and 1996) financial wellbeing has been the most affected throughout the pandemic — with 1 in 3 being ‘very’ or ‘extremely concerned’ about their household finances. In contrast, only 16% of baby boomers (those born between 1946-1964) expressed ‘extreme’ concern about the state of their household finances.

There’s a generational shift of people getting into debt. Around 20% of 25-34 year olds in the UK reportedly spend more than 60% of their income the same day the money enters their account. But debt and spending aren’t the only generational changes.

Millennials don’t want to be defined by opening hours or specific customer service channels, so prefer to use chatbots and self-serve systems. Businesses must take an omnichannel approach to receiving payments in order to cater to everyone and keep customers happy — regardless of sector.

Successful customer service today is customer-led. To avoid being left behind, companies need to be adaptable and agile. By providing the channels of choice, customers will be more responsive to collection requests when they can handle them at a time convenient for them.

2. Don’t encourage a ‘won’t pay’ attitude

When it comes to late payments, there are two types of customers — the ‘won’t pay’ and the ‘can’t pay’.

Accommodations should be made for people who are in genuine trouble and would usually make the payment if they had the means. However, businesses need to ensure they have good collection processes in place to discourage people from not paying simply because they don’t want to.

Companies that don’t have a solid, consistent early arrears collection process in place will find that people may try to buy time by dragging repayments out or ignoring communications. The consequences of not holding people accountable will only damage operations in the long run, because cash flow will take a hit and you may need to take out loans to cover other expenses.

To avoid consistent late payments, invest in a team of well-trained advisors who can spot genuine vulnerability so they can help the ‘can’t pay’ group and hold the ‘won’t pay’ group accountable.

3. Make bills easy to pay

One of the best ways to make collections easier is to avoid the need for the process where possible.

People today lead incredibly busy lives and expect convenience at every opportunity. In fact, 66% of customers want companies to understand their needs and expectations and 76% expect consistent interactions across sales, marketing and customer service departments. Therefore, if you require customers to jump through hoops to pay their bills, you’re likely to experience more problems.

The solution is to reduce the steps and number of interactions people need to make in order to pay. Frictionless collection processes can motivate people to pay on time, which helps to sieve out the ‘won’t pay’ group. As such, customer service advisors and collection specialists can spend more time helping those who need it the most.

4. Deliver a ‘human touch’ with an outsourced collections expert

Although AI is undeniably an important part of the modern customer service strategy, there will always be a place for human interaction (especially where situations can be more complex, as they often are with collections).

While the omnichannel customer experience is here to stay in the long-term, more than half (55%) of customers still prefer to talk to a person on the phone. However, conversations around collections can be tough and require a level of empathy. It’s paramount that any customer-facing advisor is equipped with everything they need to handle a sensitive situation.

Unfortunately, UK employers are currently struggling to fill vacancies and find staff with the right level of expertise. Businesses can train your team in-house, but it’s costly and time-consuming and there isn’t the luxury of time at the moment. Outsourcing means you always have the right level of support and can be agile to meet fluctuating demands.

Outsourcing helps businesses overcome their biggest challenges

The Institute of Customer Service has seen the highest number of complaints about how companies are handling their customer interactions since their records began in 2008. Availability, suitability and quality are cited as the three most pressing issues.

Businesses are falling behind because of a lack of suitable employees so, to get back on track, it’s worth considering outsourcing and leaning on a customer interactions expert who can help create a strategy that will keep everyone happy.

By outsourcing your process from end-to-end, your team can reduce the number of bills that go unpaid, give more attention to help those who need it and spend more time focusing on core business functions.

Find the collections experts you’ve been looking for with Sigma Connected

At Sigma Connected, we believe that every customer should be supported seamlessly from one end of the journey to the other.

Every business’ demands are different and will naturally vary over time as your team and customers change. We can adapt and will work flexibly to ensure your needs are always met.

Want to learn more about our services? Contact us below.