When engaging delinquent customers , there are strategies to getting your message across that are better for maintaining customer relationships while effectively collecting debt . It ’ s important for both your customer relationships and compliance considerations to keep in mind the tone and content of your messages along with the cadence of your communications . future have both also deteriorated .
CREDIT MANAGEMENT
Debts And Holiday Spending
By Wasilwa Miriongi
We are fast approaching the end of the year and Christmas period is in the air coupled with consumer financial uncertainty . Economic stressors persist and are likely contributing to many consumers relying on credit to cover expenses . For consumers , the conundrum of balancing finances continues as the holiday spending season sneaks up . If you are a creditor or collector working with financially distressed borrowers , considering consumer situations and preferences when collecting is critical to your success .
The saying goes who doesn ’ t love a party ? Obviously , Christmas is by far the largest holiday in terms of spending , which is why so many retailers rely on the fourth quarter retailing season to drive their earnings . Companies are spending big on advertising to push sales with their eyes fixed on the bottom-line .
The year-end months of November and December typically are dominated by shoppers scouring shops for deals and discounts on seasonal items , including gifts . The two months combined are also a good barometer of the spending power of the consumer and are critical for retailers , accounting for as much as a fifth or more of their annual sales .
It is a known fact that consumers spend heavily on food , drinks and candy as well as decorations during the holiday season , also spending on gifts makes up the lion ’ s share of the Christmas budget .
Holidays form a great excuse to gather family and friends for dinner and other celebrations . And with those gatherings come other expenses on new clothing , gifts , flowers , cards and other items . This Christmas seems to be slightly different in that Kenyans are feeling the pinch of high inflation as they mark one of the most costly Christmas and New Year festivities in recent times . Of course amid a challenging economic environment , the luxury consumer is ready to shop and celebrate this holiday season .
There are varied perceptions about current credit conditions and expectations about future conditions as both deteriorated . Households ’ perceptions about their current financial situations and expectations for the
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When engaging delinquent customers , there are strategies to getting your message across that are better for maintaining customer relationships while effectively collecting debt . It ’ s important for both your customer relationships and compliance considerations to keep in mind the tone and content of your messages along with the cadence of your communications . future have both also deteriorated .
Many consumers are feeling stressed about finances and are uncertain about their financial future , which will impact their payment decisions and willingness or ability to engage with debt collectors .
As we approach the end of the year and enter the holiday spending season , businesses should prepare for the possibility of increased delinquencies as consumers reach a tipping point in savings and expenses . It is evident that , as the level of debt increases , so will non-payment . Defaults in payment lead to an increase in the number of aged receivables , which would then lead to an increase in the number of outsourced receivables and the volume of debt collection lawsuits filed in the courts
From the banking perspective the risk of non-performing loans mainly arises as the external economic environment becomes worse off such as when there are economic depressions . Controlling nonperforming loans is very important for both the performance of an individual bank and the economy ’ s financial environment
In Kenya , it is apparent that many lending institutions are facing the problem of rapid growth of nonperforming loan portfolios , mainly caused by the slowdown in economic activity and political uncertainty that has created a tough business setting , resulting in a rise in non-performing loans .
With increased balances , delinquency remains a concern as it simultaneously continues to rise regardless of product type .
The question we may now ask is : Are the high delinquencies and non-performing portfolios compounded by the holiday expenses good for debt collection ?
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