Taking the Pulse on Debt Collection and New Recovery Methods in The Post-COVID Reality
The global pandemic has affected individuals and businesses differently. For some, it was a period of growth, and for others, it was a downfall.
A lot of people decided to buy properties this year, while others extended their mortgages and payment holidays. The net mortgage borrowing stayed strong at £5.2 billion in January 2021, as Bank of England reports.
However, overall consumer credit weakened in January, with individuals making net repayments of £2.4 billion, compared to £1.0 billion between September and December 2020. The decline reflects less new borrowing, as you can see from this chart.
How customer behaviour changed
Likewise, in the consumer arena, the purchasing and consumption patterns have changed and will still echo for years. Amongst all the unpredictable things that happened, we saw patterns occurring globally:
- The economic impact
- The erosion of brand trust
- The rise of digital
- The migration to remote working
These common trends are showing pressure on consumers, impact on businesses, and so on the economy. As the consumer-brand relationships are likely to change because of COVID-19, companies need to re-evaluate how they build trust with their customers in this new world. The brands that can communicate proactively and engage their customers through personalization will adapt easier and be more successful.
Regardless of the size of your business, a common concern in the past year has been cash flow management. It’s unclear how long the pandemic and its economic effects will last. Therefore, finding the right debt recovery methods is more crucial than ever.
The trust in debt recovery agencies was always on thin ice, so companies need to meet the needs of their customers first and come up with different tactics of recovering debt. VoiceSage’s customer engagement specialists advise that payment simplification and proactive communication are the two factors that will improve collection rates, and therefore cash flow management.
Finding the best collection methods
If you are looking to increase collection rates, keep the communication flowing. And that doesn’t mean harassing people, sending aggressive written notes, or making it impossible for people to reach out.
In 2020, according to Credit Services Association (CSA) figures recorded in its Data Gathering Initiative, more than three-quarters of a million borrowers received additional covid-related forbearance from DCAs.
The CSA’s Chief Executive, Chris Leslie comments “Conversations between customers and lenders made a big difference in 2020.”
Borrowers could also prevent difficulties if they engage in communication with creditors at an earlier stage to discuss repayment plans and affordability.
So, how can this be fixed?
Ensuring that debt is paid in time requires special consideration. Methods like proactive communication are what we like to refer to when you reach the right person, on the right channel, at the right time.
Offer self-serve options
A debt collection agency that offers no option for customers to self-serve makes it hard to connect and build trust. The debt collection space already has a negative image that many companies are trying to rectify. Also, many people might not want to speak directly to an operator due to the embarrassing nature of being in debt. Make it accessible to self-serve while adding the option to talk to a live agent when the need arises.
Present payment plans
Make it achievable for the customers to pay back the debt by setting payment plans. Arranging an affordable and flexible repayment plan means that you found a tailored solution for individual income and expenditure. This brings mutual satisfaction to customers and collectors.
Improve credit collection and cash flow management
One option to collect payments faster in a secure, cost-effective manner is using VoiceSage’s Rich Media Messaging solution that can improve cash-flow management and payment rates by up to 65%.
Another idea is to send automated payment reminders to scale up your debt collection processes and reduce operational costs by lowering inbound calls from customers with an effective communication strategy.
And lastly, use Interactive Voice Messaging (IVM) campaigns to push a customer to an agent to make a payment or an inquiry.
Adopting self-service collection options can achieve up to 20% ROI and reduce high inbound call volumes by 30%. VoiceSage can help you free up your agents’ time for higher-value tasks, improve CX, and earn recognition with self-service collection options running 24/7 365 days.
VoiceSage has a wealth of knowledge in the debt collection space and can help you create an optimized collection process that will increase payment rates, operational efficiency, and customer satisfaction. Book a demo now, and we’ll be happy to help you.