Nearly a quarter of small and medium businesses in the UK could face insolvency because of one thing, reports The Telegraph. They’re not getting paid. Late payments and overdue invoices are piling up for these businesses. A full 22% of these obligations are owed by large companies.
Companies in the UK aren’t alone. Owed funds are a huge problem for retail banks, telecoms and utilities across Europe and the Middle East. They eat into firms’ revenues and can be costly to collect and recover. On top of this, collections departments and third-party collectors are struggling to perform adequately in the face of rising non-performing loans.
Why is this so important? Because this isn’t a temporary business challenge; it’s the new normal for businesses in many industries. And most aren’t effectively prepared to collect and recover these debts.
That’s because they’re using outdated collections processes.
Why Your Collections Processes Are Outdated
Today’s debtors are multichannel. They communicate and do business over more channels than ever, including web, mobile, social media and SMS.
They also rarely pick up phone calls from numbers they don’t know. That’s a problem because collectors far too often rely on interruptive cold calls to resolve debt obligations. But now, debtors have all the power thanks to online technology. And they’re using that power to put the phone away.
Even collectors who do get through fail to truly engage customers on their terms. They simply push aggressively for a settlement. Poor performance is the result, because consumers now have multiple debt obligations. And they decide which debt takes priority when it comes time to pay.
When that decision occurs, they’re not going to call you. We now live in a convenience-driven age where consumers expect to be able to access information and solutions at all times via any channel of their choice. They want to resolve the debt on their own terms, often with little or no interference from a collections representative.
Whether a business is drowning in late payments and owed debt obligations—or has mercifully avoided this challenge—the solution to addressing and preventing them is to adopt modern collections techniques and technologies.
4 Ways to Improve Collections Results with Modern Techniques and Technology
Our full guide to modern collections and recovery best practices is a comprehensive resource for defeating late payments for good. But to get you started, here are four ways to collect more, resolve more obligations and prevent late payments by taking a modern collections approach:
- Multichannel, measured communication. The interruptions need to stop. You’ll need to change how and where you communicate with customers if you want them to respond. Different communication methods are essential to making customers the right offer at the right time.
- Segment customers. Segment customers into different groups based on risk levels. Treating long-delinquent customers the same as those who have only just missed a payment is a recipe for poor results.
- Offer a self-service option. Giving customers a self-service solution lets them settle debts themselves, online and without your direct involvement, which increases self-cure rates and improves collections results. It’ll also prevent late payments from happening in the first place.
- Implement a specialized collections solution. Implementing specialized collections software is one of the best ways to quickly improve collections results. A specialized system is built to assess risk, segment portfolios and use analytics to boost the amount of payments or loans your organization recovers.
What is your approach to tackling the late payment scourge? Have you tried any of the above strategies? Let us know your thoughts in the comments.
Image Credit: TaxRebate.org.uk