Debt Collection Strategies During The Covid-19 Crisis
The coronavirus pandemic has created multiple new challenges for the debt collection industry. A recent survey indicates that almost two thirds (64%) of credit customers anticipate (or have had) a wage loss. In the US, the majority of the affected are losing at least $500 a month. At least 27% say they lost more than $1,000 in wages monthly.
Even worse, some of these people have lost their jobs altogether. In the US, for instance, 36 million people had filed for unemployment by May 15. In the UK, meanwhile, unemployment is now 9% from just under 4% early in the year, according to The Guardian.
Worse still, it’s not just about the income and job losses. The curfews and lockdowns have significantly hindered debt collection logistics. Staff can’t come to work, creditors who’d like to pay in person can’t do so, and, in some instances, agencies are being forced to trim workforces.
Collection agencies can overcome these new challenges in two steps;
Step #1: It’s Time for Fresh, More Customer-Centric Solutions
Collection agencies must find new, more supportive ways to “deal with” debtors. If you’re to survive this crisis and establish your agency for long-term growth, you need a different approach; you need to show that you care about the wellbeing of your customers.
To this end, debt collection agencies must;
- Respect, listen to, and treat customers with empathy
- Assist customers to prevent delinquency in the first place
- Provide choices regarding methods and timing of payments
- Provide education on delinquency and its impact on an individual’s life
Collectors that can deliver on these four areas are much more likely to get paid. Where the debtor owes multiple creditors, you’re also more likely to be paid first.
Step #2: Embrace Debt Collection Tech Solutions to Boost Efficiency
Many agencies are already adopting technology to solve various collection challenges. In light of the coronavirus, the rest should follow suit. We recommend the following;
- Effectively go virtual
Meetings, for instance, can take place virtually. You don’t have to meet in person. If you need to meet a customer to discuss payment options, do it via video chat. It’s not only more efficient for both of you but also cost-saving for the customer.
- Manage employees and delegate tasks online
Remote work reduces the time and money spent on commute, meaning that employees can spend more time working for your agency while saving a few bucks for themselves. Better still, it increases productivity. Studies show that people who work from home are a lot more productive.
- Improve collection security and privacy
Collectors, by the very nature of their jobs, need to collect and store customer information, either themselves or through third-parties. You must viciously guard the data from misuse, interference or loss, or unauthorized access, especially in this covid-19 period. It goes a long way in boosting brand reputation and customer loyalty.
- Migrate all data online
For one, debtors feel more empowered to make repayments when they can access their debt accounts online. Secondly, today’s consumers already spend a lot of time online. Taking your agency operations online, therefore, means taking services to customers’ doorsteps.
- Find solutions to payment problems
Finally, you must also provide ways for your customers to make repayments digitally, whether through apps, mobile payment solutions, or web collection software. Online collection increases collection rate, encourages early repayment, decreases collection time, and boosts customer experience.
It’s About Both Short and Long-Term Outcomes
Implementing the measures we’ve discussed here will help you make more collections in the short and medium-term as well as position your agency for sustained, long-term success.