Managing Collections in a COVID Environment

One of the great challenges in the collections industry is getting the balance right. The subject of money can inspire strong reactions in people, all the more so when one’s personal finances are tight. That is why managing debt can see businesses often feel like they are walking a tightrope.

On one hand, they want to deliver a great customer experience. On the other, a key aim is to effect the recovery of money. It’s a balancing act in every sense of the term and the last thing businesses want is to end up in the public spotlight for utilising heavy-handed or unreasonable tactics in a bid to ensure the latter.

This focus on balance has never been more important than now as society navigates its way through the economic impact of the COVID-19 global pandemic. Specifically, consumers are being hit in two ways – one, an increasing number may not have the funds to pay their bills and two, being at home without work is creating situations where people are experiencing vulnerability from isolation, depression or, in some instances, domestic violence.

Identifying genuine hardship

In this difficult environment, it is imperative to ensure customers exhibiting genuine hardship are treated sensitively. This is not an easy task. However, with specialist training, staff can effectively learn to pick up cues that indicate genuine hardship. Through an ability to listen and interpret, they can identify indicators, characteristics or behavioural patterns from customers that act as a guide for the best next course of action. Recruiting empathetic team members also assists in this regard.

As anyone would appreciate, there is a big difference between someone who has an intention to pay a debt but no means to do so, and someone who has the means to pay but no intention. Understanding this balance is delicate but also very important.

Another unique aspect of the COVID-19 environment has been the introduction of policy or guidelines that recommends credit operations from collecting debt in some sectors. Typically seen in arenas such as banking, finance and energy, such debt pauses have been designed to momentarily ease the load on vulnerable consumers but there is genuine concern about the long-term impact of getting people used to not paying their debts.

What lies ahead

There is increasing uncertainty among the business community about what the world is going to look like when stimulus packages such as JobKeeper and JobSeeker wind up at the same time that debt pauses in the banking and energy sectors end. A range of businesses are concerned about how they will navigate the likelihood of a significant increase of activity in this space while trying to balance the fact many people will be suffering genuine hardship and vulnerability.

Consumers can very quickly become accustomed to not meeting their debt obligations and it is important to be working closely with debtors to educate them and appropriately manage the transition to an environment when payments are required again. This includes constantly communicating with them about what lies ahead and staying in touch to see how they are tracking both financially and emotionally. Education pieces are also key in preparing people for a world without debt pauses and stimulus packages.

Once again it all comes back to balance. There has to be a real level of caution in managing the balance between collection and customer experience. If businesses can find that balance, they will be in a great position moving forward.