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 .
Many people believe a recession would be good for the debt collection industry . They think more debt leads to more collectible debt , more collections , higher returns to clients , and increased fees to debt collection firms .
Despite popular opinion , a recession does not benefit the debt collection industry or an individual business ’ s debt collection efforts . Economic instability will affect the collection of your receivables , but not for the better .
So what is the best way forward in engaging customers in debt collection who are balancing a delicate financial situation ? Any or all of these best practices can help :
Go digital with communications . The numbers speak for themselves many consumers prefer email as their first choice for financial communication compared to only a few who prefer to receive a phone call . Factor in working hour considerations and it becomes even more difficult to engage consumers via phone . Further , contacting first through a consumer ’ s preferred channel can lead to increase in payments .
Remember to digitize payments , too . Consumers have long been transacting online for purchases , and now three out of five in Kenya expect all payments to be digital in the near future . The benefits of online payment options range from customer ease-of-use and adoption to operational cost reduction while offering increased payment volume to boot and options customers prioritize payments to companies that offer lower-friction payment experiences .
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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 .
Ensure you are the priority in the customer ’ s mind such that your invoice receives first priority . There is a lot on consumers ’ minds in today ’ s economy , and your payment may not be at the top of their priority list . 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 .
Wasilwa Miriongi is a Certified Credit Professional currently working as the Managing Director , Del Creder Credit Management Limited . You can engage him on this or related matters via email at : WMiriongi @ gmail . com .