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Five ways to make your debt collection more effective
by Steve Foley

One of the more optimistic takes on the global coronavirus crisis is that somehow, by facing an invisible and deadly common enemy, we would emerge from lockdowns and isolation with a renewed sense of the value of community and togetherness. This is particularly important for businesses. While the importance of social responsibility was growing before the pandemic struck, ‘business with a purpose’ is a mantra that no company – from start-up to multinational – can now do without. Businesses are expected to provide great products and great service, while moving towards a more sustainable future and supporting causes that their consumers care about.

All this falls down, however, if a business treats those that have been left the most vulnerable by the pandemic with contempt. While before the vaccine rollout, Covid-19 itself could seriously harm anyone, the effects of repeated lockdowns and restrictions across the US and UK have overwhelmingly pushed the poorest to their extremes. Furlough and stimulus money kept some heads above water but now those programs are winding down and many people are defaulting on their payments.

All these factors combined make debt collection a particularly dicey task. How do companies recoup their payments in a way that isn’t seen as predatory or capricious?

In the US, one in 25 people stopped paying their mortgage payments last year, while 17 million filed for unemployment. It’s a similar story in the UK. In October 2020, it was estimated that 12 million people would struggle with paying their bills in 2021. Nearly half a million people started 2021 behind on their rent or mortgage payments because of coronavirus.

These will need to be repaid at some point, but that doesn’t mean debt collection has to be done in the same way as before. In June, the UK’s HMRC announced that it would start to collect debt again – admittedly with a lighter touch – as we emerge from Covid restrictions, meaning the time is right to start considering how your own business goes about doing the same. Here are five ways to make the process more effective.

1. Hire a debt collection agency

Keeping debt collection at arm’s length reduces the chance that your company’s good name will be dragged through the mud. By leaning on their expertise in dealing with a broad range of reasons why debtors are unable to pay, you will also avoid any overly aggressive or ineffective approaches. When hiring an agency, it’s beneficial to get them on board before there’s a major issue so they can learn your processes.

There are various payment models when it comes to hiring a collection agency, but it’s worth considering hiring one that works on a contingency fee basis. This is because they are incentivized on successful cases where they get your money back.

Two things should be top of your checklist: Be sure that they are a licensed and trusted company and ensure that their customer portal is user friendly.

2. Use preventative measures

In the past, the first sign that debt collection measures were needed was the individual or business being unable to make their payment. The reasons behind this were unknown as were how long they would likely be in this position. Advancements in AI have changed this to the point where proactive automated communications can be employed to check in with your customers on an ongoing basis. This can encourage them to set up repayment plans quicker and avoid them getting into more trouble.

ContactEngine recently worked with a leading communications service provider to increase their debt collection by 22%, with a 20% reduction in days to pay by using this approach (you can learn more about that here).

It’s kinder, fairer, more effective and way more in line with a modern society.

 3. Centralize data

This is related to the previous point but is so important that it deserves its own section. Even if you aren’t employing AI, you need to have all your data accessible to the people that need it. Contact center staff need to be able to see why problems are arising and how best to support each customer based on their history with your business.

But this is only useful if it’s updated regularly. Employees need to have ‘maintaining quality data’ built into their job descriptions. Collecting and using data well is all about mindset, its importance should flow through your company culture and its values.

The benefits of this in terms of employee time saved and increases in productivity and effectiveness are well-documented. No good business decision can be made without access to the right data.

 4. Understand the reasons why someone can’t pay

Not all debtors are created equal. There’s a huge difference between those who can’t pay, those who refuse to pay and those who don’t know they need to pay. Having an individual strategy for each of these types of debtors is the first step, but that is only the beginning. Each person must be dealt with individually and be presented with a payment plan that is achievable and flexible and takes into account their income and home circumstances.

Extending human compassion is of course a job best left to, well, humans, but that doesn’t mean you can’t use automation for initial fact finding. AI can be trained to pick up when a customer is willing but not able to pay and pass that customer onto a friendly person to resolve the issue.

5. Use a multi-channel approach

The days of threatening letters with red stamps are over. Or at least they should be. People deserve to be treated with respect whether they owe money or not and they also deserve to be spoken to in a way they are most comfortable with.

This means that digital channels, such as text and email, are far more likely to generate a positive response. These are naturally seen as more conversational and less demanding and invasive, so are the place to start when trying to collect debt in a compassionate way.

Recent advancements in AI’s ability to understand and reflect human language can help here too. By using software to talk to the individual in a way they are familiar with will increase engagement.


Debt is a loaded term, with a lot of emotion, prejudices, and uncertainties around it. But that doesn’t mean your business has to add to it. By employing the practices outlined above and shifting the mindset from seeing debtors as reckless, irresponsible or dishonest to those that just need a bit of compassion and a helping hand – or even just to be dealt with in a way that works for them – you can increase the amount of money you get back while living your company’s humanistic values.

To learn more about how the latest advancements in customer service technology can be applied to help reduce the cost of collections, increase repayments, and help prevent your customers from becoming indebted, download ContactEngine’s whitepaper Collections - prevention is better than cure.

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