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DEBT RECOVERY

By Michael Wright

Having worked as a Collections and Recovery Manager for a utility company, and also, practised as a Solicitor within the Scottish Legal profession for over 16 years, I have witnessed many changes and developments to improve the area that is debt recovery, both domestically and commercially.

Yes, there are subtle differences between the recovery of debt in terms of whether it is a domestic or commercial debt. Broadly speaking, the way in which it is recovered, it is very similar.

Past VS Present

In modern parlance, the dialogue that is utilised is much different to what it used to be. When debt recovery companies emerged, it was a case of “anything goes” and some of the draconian tactics that we adopted, were considered entirely acceptable. Wheel forward to 2019 and those previously employed (and deemed acceptable) behaviours are now completely alien and considered borderline abhorrent to where the industry now resides. We now have to meaningfully engage with the debtor, whether through electronic, postal or telephony means. The industry has very much a distinct and regulated “duty of care” towards each and every debtor, and it is paramount that we recognise the challenges that they face and understand their financial needs and commitments.

Importance of capturing the right data

A major part of this exercise is the initial capturing of the correct data source to ensure that all information is accurate and up to date. If the information that a utility company holds on a debtor is in anyway erroneous, or ambiguous this has a direct negative effect and impact in the recovery of the debt. If an application has to be submitted to the court for the recovery of a debt and the information held is inaccurate, it is patently clear that a decision in the favour of the utility company is highly unlikely. It is the classic principle of the 6 P’s (Prior Preparation Prevents Piss Poor Performance).

Importance of engaging with external stakeholders

The industry has also recognised the importance of engaging external stakeholders to provide a financial snapshot of the debtor and any risks that may present as a result. However, identifying risks in modern day debt recovery is actually highly advantageous as the utility company can then tailor how they approach each and every customer. Long gone are the days of treating customers with a broad-brush approach, we are acutely aware that one financial cap does not fit all. There is now a plethora of software tools, which allows the utility industry to properly analyse, manage and discharge its function in a much more fluid and indeed accurate fashion. This not only benefits the industry but also the customer.

What does the future hold?

As for the future, there is still a road to travel. However, with the emergence of more sophisticated technology and more companies choosing to manage their affairs electronically, I see debt recovery moving towards an online platform. We will be engaging with customers increasingly through SMS, MMS messaging, a greater use of online webchat and sending maildrops via electronic mail. However, I foresee the bigger development happening with the court function. As a former Solicitor, I was party to discussions on how the court would discharge its function in the future, especially within the civil court environment.

The vision will be to dispense with the need for Utility companies (or personnel) to attend court proceedings, or be formally represented within a court setting, nor will the debtor have to engage Solicitor/Counsel. The process will also all be handled by a lay bench. Individuals with industry experience, will offer their opinions and ultimately decide whether a debtor has been wronged, or if the Utility company should be able to recover the debt. This should make the experience a much less protracted affair, much more cost effective and certainly less intrusive on all parties concerned.

It is now transparent that the tables are relatively equal. Yes, the creditor has to recover the debt, but this should not be at a cost to that of the debtor. As stated above, there has to be a clear understanding of why the debt has occurred and what we as an industry can do to recognise this much earlier on. With technology, it will be in our gift to manage matters more closely, we will have the necessary triggers and warnings much earlier, which in the future will make the customer journey a much smoother and hopefully more enjoyable one.

About Just

Just is the first digital marketplace for High Court Enforcement and offers a safe, accessible and intelligent way to responsibly enforce judgment debt across the UK. To find out more about our services visit: https://www.just-dm.co.uk/services/judgments-for-money.

About the author: Michael Wright 

Michael Wright, former legal professional and recent Collections and Recoveries Manager.

THIS IS A GUEST BLOG – the views are that of the readers and not Just.

 

EVOLUTION

By Mark Yates

I have worked in the collections industry for over 20 years, coming across several different platforms in various industries. I have watched how businesses have attempted to use more technology and smarter systems to increase debt collection ratios. However, during this time, it appears that the consumers’ knowledge of debt has also increased with the same problems still occurring.

Debt collection has become more automated, leading customers to believe that their debt is just another cog being put through the machine. As customers do not trust the company, they cause delays in paying back due to the lack of engagement and interest, believing that the threats are empty. I have long believed, the bigger the company, the more likely it is that a consumer can manipulate the processes and buy as much time as they please.

Debt in the utility sector

In my energy debt career, I was exposed to the massive growth of a business, turning from being a small independent company to becoming part of a huge multinational. Most energy providers put little or no funding into the credit side of their business, and we have now finally come to understand what happens to those that do not realise until it’s too late.

What are the suppliers doing wrong?

Suppliers are all busy fighting for competition rather than addressing the main common issue; most consumers attempt to move supplier to avoid the debt process! In some instances, due to the lack of correct data and the process of handing over this data properly, new suppliers tell their consumers to ignore collection attempts from their previous company. However, within months, the debt arrives at the door knocking phase of pre-disconnection visits and attempts to gain a warrant to disconnect. I have been lucky to work with setting the process up to prefer installation of prepayment meters as a far better solution than to cut supplies off. Most consumers relent on this but in a good percentage of cases there will be a multitude of technical and physical reasons why an install of a prepayment meter is possible. These then end up in the legal world of collection as you have no chance of install and a customer hugely disillusioned with your company having taken such dramatic steps. Most legal processes are largely going to fail with energy debt if the before mentioned process has taken place as the consumer knows the supply will never go off. 

There is no incentive to pay and as with many debtors, if they don’t have the disposable income and have no criteria to be sued on, then the money spent across an average debt will nearly always show such a poor return, it’s hardly worth sharing the information with the legal team and administering the debt.

What are you, as a company doing wrong?

Keeping the aged debt in-check is seen as of little importance when comparing it to selling contracts, producing bills and ensuring supplies remain connected. Various businesses will throw large amounts on high salaries for credit managers, credit controllers and senior collections experts when it’s already going bad, and it’s at this point the patience to stick with a plan wears thing and a flip flop ensues of one specialist who believes in outsourcing is replaced with the next that wants inhouse specialists. This leads to complete chaos and within the business, its staff and the consumers who don’t know if they are coming or going.

What are the consumers doing wrong?

The biggest problem with energy debt is that a consumer can be pursued for a debt that they believe is wrong. Countless members of various departments do not take ownership and when many months have passed, the consumer becomes apathetic towards the mixed responses, electing to give up and trying to resolve, assuming that nothing will happen. This will lead to a rapid escalation of unpaid debts. From my experience, when the consumer is disengaged, they stop providing reads and estimated invoices over a long period to be over-estimated more often. It’s at this point that the account cycles through a debt collection process and increasing the amount of thousands out rapidly.

Solution

By being fully engaged with the consumer and providing a one-to-one dispute and debt management function, you’ll be able to maintain their trust, allowing you to engage with them to find a solution to overdue debt. Hard-nosed ignorant attitudes to debtors will turn the ‘can’t payers’ into belligerent won’t payers. As we move into the era of smart meters with the facility to switch from credit to prepay, it may help for a better solution but with regulations as they are, it could lead to just as many problems given that most switches will still need attendance at site. Prior to privatisation, energy was relatively low in the list of household expenditures but now, it has become a significant part of a consumer’s outgoings. It is more important to give these people a more hand on approach. Classic legal approach with the vast majority of defendants, is to seek a charging order or attachment of earnings. If they do not own a property or hold a long-term well-paid job, you lose any realistic chance of a successful outcome. In most cases, even if you secure a charge you can wait up to 30 years to realise this, and with people being more likely to change jobs every 4 or 5 years, the attachment is usually a more difficult route.

In summary, you need to get to know your consumer well. You will never succeed if you do not pick up the phone and speak to them!

About Just

Just is the first digital marketplace for High Court Enforcement and offers a safe, accessible and intelligent way to responsibly enforce judgment debt across the UK. To find out more about our services visit: https://www.just-dm.co.uk/services/judgments-for-money

About the Author: Mark Yates

Mark Yates, is a dedicated individual, a stickler for compliance and diligence and obsessed with streamlining processes. He believes having a laid-back nature helps. His career in finance started with benefit fraud, so this aroused his naturally suspicious nature and has lead to various successes in identification of fraudulence within banking, property, insurance and latterly in energy revenue protection. He uncovered mass crash for cash manipulation by accident management companies which were deemed originally as customer fraud.

A unique individual who will challenge process even if this means upsetting senior management. He sees himself like marmite "you either love or hate me. I put this down to a strong personality and confidence in my own abilities. Some people take confidence as arrogance. I disagree obviously".

THIS IS A GUEST BLOG – the views are that of the readers and not Just.