Debt collection considerations for a post-COVID landscape

Topic: Finance & DCAs, Utilities

On 22nd June 2020, it was announced that Ofgem had confirmed energy companies were once again, allowed to contact customers regarding unpaid bills. While this must be carried out with the utmost care for customer welfare, and the use of bailiffs will continue to be prohibited, Ofgem has told energy suppliers it is not in anyone’s interests for an open-ended debt collection delay.

In Ofgem’s letter to its suppliers, Chief Executive Jonathan Brearley said – “Suppliers need to consider how their approach to debt management should evolve going forward as they continue to deal with customers financially impacted by the COVID-19 crisis.”

As the post-COVID19 landscape continues to evolve, businesses need to ensure their recovery processes are able to adapt. At Esendex, we have a wealth of experience with debt collection and below are some of the main areas for consideration, we believe companies should prioritise in the current climate.

Make it fair 

In the letter from Ofgem it states – “We expect suppliers (and any third parties contracted by them) to ensure that any debt management processes are fair and give careful consideration to the customer’s circumstances and ability to pay.”

As is always the case, treating customers fairly is a priority and to do this effectively it’s essential that your business understands your customers’ circumstances and is able to adapt to them appropriately. Individuals in debt often feel stressed and anxious, and as the pandemic has already caused a lot of uncertainty, your customers are likely to be even more vulnerable than usual. This should be taken into consideration when drafting communications, and recovery processes should be made as simple and low-touch as possible. 

Maintain customer engagement 

For debt collection to be successful, being able to effectively communicate with your customer is vital. Some collection processes are relatively long and as such, it is imperative that individuals choose a communication channel which keeps customers engaged throughout the entire process. Utilising SMS, Vaillant were able to increase their customer engagement by 38%.

Think mobile first 

Research reveals that not only do just 45% of UK households have a landline, compared to 84% having a mobile phone, but the indebted population actually rely more heavily upon mobile. With this in mind, it makes sense to ensure your debt recovery processes are optimised for mobile. 

Furthermore, with more being done to protect users from fraudulent SMS, it’s worth investigating whether your SMS service provider is able to register your ‘from’ name on the MEF’s SMS SenderID Protection Registry. If not, you could risk customers reporting legitimate messages as spam, which may negatively impact both user experience and the effectiveness of your collections. 

Consider automated, self-serve options 

Historically, a standardised ‘PAY NOW’ approach has been used by many businesses, which doesn’t offer the flexibility required by customers to pay on their terms. By introducing a collection process which allows customers to make payments whenever and wherever they like, arrange various repayment plans, make a promise to pay or speak to an agent, your business can empower customers to self-cure their debt. Furthermore, enabling customers to take a more proactive role in their debt recovery, could go a long way towards securing more favourable outcomes, especially in the current climate where wages might not be as secure. 

Communicate in real-time 

Often collection methods don’t account for the fact that messages aren’t delivered in real-time, for example there are often long periods between calls with debtor and collector, and delays experienced as a result of direct mail. This disconnect can lead to communication breakdowns, which make it difficult for firms to create unique payment plans for customers, and can have a very negative impact on the customer experience. Given that 86% of payment reminders delivered through agent-based calls are ignored by customers, it’s clear that businesses need to think beyond the realms of traditional voice to be successful. This is where a multichannel communication approach proves most effective.

Keep payments secure 

Finally, customers need to be assured that when they make a payment, they are doing so via a channel which is secure. At Esendex, all of our mobile collection solutions are PCI level 1 compliant, guaranteeing that our clients can offer that level of assurance to their customers.

While debt collection is not always the easiest topic to broach with customers, debt recovery can be conducted within a framework which ensures customers are treated fairly while also remaining effective. In the current climate, it’s more important than ever before to use effective communication to keep the dialogue open with your customers.

To learn more about how Esendex can help your business introduce a mobile collection solution and increase your debt collection success rate from the average 20% to 38.2%, please contact us on 0345 356 5758 or at [email protected].

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