How to Reduce Your Debt Exposure in a Post-Pandemic Recovery?

How to Reduce Your Debt Exposure in a Post-Pandemic Recovery?

We’ve seen how unexpected shocks can upend entire economies, industries, and communities. The COVID-19 pandemic has created unprecedented challenges for the collections industry due to new regulatory rules, changing consumer demands, declining disposable income, and limitations on movement. Traditional collections processes may not be sufficient in the new normal.

 

To keep up with the changes, organisations need to take an unconventional view of debt collections and examine how it can benefit the business, whether you’re a financial institution, insurer, or company undergoing a merger and acquisition deal.

 

As the world tries to forge a path ahead, the road to recovery will be long and hard. We expect a potential uptick in collections activity as forbearances and deferments fall off. However, with inflationary pressures, many consumers will struggle to make ends meet. As such, collections departments need to brace themselves for unpaid debts to be collected, renegotiated, or written off.

 

Debt collectors must adapt to the fast-moving landscape.

 

One challenge facing companies is the dynamic nature of data. With consumer data constantly changing and growing, people are becoming harder to track. In addition, more robust rules to protect personal information mean collectors need to ensure regulatory compliance with heightened regard to the accuracy, security, and delivery of people’s data.

 

How Experian can help

 

Capturing accurate consumer information and implementing processes that evaluate the data’s validity are crucial to reducing risk throughout the consumer life cycle. Looking at non-traditional or alternative data, such as telco and rental data, can also help provide early indicators of distress. Early alerts can facilitate better customer management and shape collection efforts. 

 

Experian’s Debt Collection Services can provide clients with solutions that allow them to capitalise on opportunities, mitigate risk, and remain compliant. Using data and analytics, clients can better optimise their collection efforts and prioritise customers based on their probability of paying.

 

A consumer-focused process

 

Experian can help clients create a consumer-focused process that can turn even hard-to-find debtors into valuable customers. In an omnichannel environment, businesses can engage with their customers in their preferred channel—via text message instead of a phone call, for example. This method creates a more positive experience, increasing the likelihood of a successful collections campaign.

 

Experian is also certified by the Outsourced Service Providers Audit Report (OSPAR), which indicates the same level of governance, rigour, and processes that financial services are required to follow per the Monetary Authority of Singapore (MAS). Because of this, Experian can sync into data management and reporting requirements more seamlessly and effectively compared to other providers.

 

With Experian’s debt collection solutions, businesses can remain compliant and on budget while maintaining a good customer experience. 

 

The pandemic has also shown that collection processes have a broader application beyond traditional banking and credit products. In the case of company consolidation, for instance, paying attention to debt management is vital to be ready for sustainable performance.

 

Debt Recovery Beyond Retail and Credit Financing 

 

 

Due to the changing business environment, collections have become essential to a company’s sustainability. As a result, we are seeing more applications of collection services outside of traditional scenarios like retail financing and credit products. Take these two case studies below.

 

When COVID-19 hit, insurers had to pivot their resources, resulting in certain functions being redeployed or deprioritised. Over these two years, some outstanding accounts receivables cases began to age, which was challenging from a collections standpoint.

 

A leading insurer approached Experian to help recover these aged accounts, given its proven track record with financial institutions. Experian was also OSPAR-certified, which meant that it deeply understood regulatory and compliance guidelines and the complexities in handling this kind of portfolio. In the end, Experian delivered a recovery amount that exceeded the client’s expectations while bringing about operational efficiencies.

 

In a major transportation M&A deal, the acquiring company had inherited a significant loan-debt portfolio. The company had tried different approaches to managing it, including creating its own in-house team. However, they needed a partner with experience in bank-related collections portfolios to reduce its debt exposure over a short period of time.

 

Experian provided value-added solutions, such as its negative listing service that contributed to the responsiveness of debtors in repayment. Experian’s in-house collections team was also made up of experienced collection professionals well-versed in the automotive and leasing business.

 

More importantly, the team was classified as essential workers, allowing them to continue their work even as limitations were imposed due to the COVID-19 pandemic. This enabled Experian to service the portfolio consistently, which garnered good results.

 

During uncertain times, what options do businesses have so they can perform their collections activities efficiently? We’ve seen the evolution of debt collection and how sectors outside of retail and credit financing are benefiting from this service. Moreover, a reliable debt recovery partner can help companies from different sectors enjoy returns and cost savings.

 

Find out how Experian can help your business optimise your recovery and collection efforts through our Debt Collection Services.

Read full article

Experian

By Experian 08/31/2022

Related Articles

Experian Named to Top 10 in IDC FinTech Rankings Top 100
Experian Named to Top 10 in IDC FinTech Rankings Top 100

Experian has ranked #9 on the newly announced 2022 IDC FinTech Ranking, jumping from its previous position at #11. The FinTech Rankings is an annual ranking which highlights the top…

Learn more
One in four consumers have fallen victim to online fraud in Asia Pacific
One in four consumers have fallen victim to online fraud in Asia Pacific

Consumers surveyed in six APAC markets are most vulnerable to online fraud on social media sites, a new Experian report shows

Learn more
Mobile wallet use rivals traditional payment methods in APAC
Mobile wallet use rivals traditional payment methods in APAC

APAC consumers continue to embrace online experiences as economies learn to co-exist with the pandemic, but businesses still need to improve their digital experience to retain consumer trust, Experian report…

Learn more