As we draw closer to leaving the EU on October 31st and with no clear political decision on what form that exit will take, some crucial planning decisions lie ahead for collections managers.
It’s logical to plan for the predicted economic downturn and the resulting impact on levels of household debt and on the ability to repay. Forecasts from the Bank of England and the DExEU’s impact analysis assessments predict growth slowing over a 15 year period. It’s reasonable to expect that more consumers will find themselves under financial pressure if these predictions prove to be correct. Debt collection managers will already be thinking ahead about how their existing set up will cope with the anticipated increase in demand. There are three choices:
- Recruit. Grow the collections personnel now before you become overextended and customer support levels suffer. This is an expensive option and one that takes time and resources. In the worst-case scenario, it may be that the time for this option is already past. Quality collections advisors will be harder to acquire as economic consequences take hold and demand grows. In the longer term, you may be left with additional capacity you no longer require, having invested in training and resources for the expanded workforce.
- Outsource. Outsourcing makes sense if you want to avoid the costs of recruiting extra staff. It relieves capacity pressures, however, outsourcing means losing some control over how the customer in arrears is managed; it means placing the organisation’s reputation in the hands of a third party. Although convenient, outsourcing is expensive and will increase the cost to collect. Depending on the severity and length of the economic downturn, it is possible that DCAs may find themselves stretched to capacity, making quality services harder to come by.
- Automate. If you prefer to keep control of operations and to manage fluctuating demand in-house, digital automation is likely to be a strong consideration. Now that protracted and costly IT projects are a thing of the past and modern technology can deliver a system showing results in a matter of weeks, the immediate needs of the business can be met without delay. With engagement rates over ten times higher than dialler activity and four to seven times higher than two-way SMS*, diverting a large proportion of early collections to digital could transform the contact centre workload and create an elastic capacity that may well be crucial in the coming months and years. In addition, with a software-as-a-service contract, the risks and costs are kept in proportion to delivered functionality and usage.
While political opinions on Brexit remain divided, the prospect of an economic squeeze on consumers is widely accepted. Any downturn is likely to result in a rise of customers in arrears and with the clock running down, it may not be advisable to ‘wait and see’ for much longer without putting in place a cost-effective way to scale up collections capability. As businesses are put under pressure across the board, no one wants to contemplate a costly proposal that unbalances the departmental budget and inflates overheads. Digital self-service is the prudent alternative to recruitment and/or outsourcing at a time when economic uncertainty makes regulatory compliance, a competitive cost to serve and elastic capacity a necessity.
*Flexys customer results