Tackling the debt collection taboo amid a growing energy crisis

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As far as the industry is concerned, a long history of poor customer service, the use of bailiffs and aggressive tactics that operate on the outside lines of legality by old-school debt collectors, has generated a insensitive and indifferent image in the eyes of the public.

As we approach the depths of winter, the growing energy crisis has seen many customers struggle to pay growing bills, and many run into arrears before the colder months hit us again. For energy suppliers, while recovering their debts is essential to their survival as a business, how they approach this issue will be of paramount importance, especially as many of their customers face to difficult financial situations.

The taboo of debt collection

As good as increased energy bill costsrising inflation and cost of living, cuts Universal Creditand the end of government leave scheme also put increased pressure on people’s finances despite the Government launches £500m fund to support vulnerable households this winter.

For energy suppliers, while collecting their debts is essential to their survival as a business, how they circumvent this problem becomes even more important, especially as many of their customers will face difficult financial situations in the coming months.

By taking a different approach to debt settlement, energy providers can transform their technical and operational processes, while strengthening customer relationships and improving their reputation as a business.

living with debt

The words “debt collection” have long been loaded with negative connotations.

From a client’s perspective, being contacted by a debt collector often results in feelings of shame or embarrassment, despite the fact that most people fall behind in payments due to unexpected life events.

In reality, 62% of consumers agree they would feel more comfortable being sued for a late or failed payment by an automated message, such as an email or text, rather than a call or notice from a human being, although industry practices have traditionally used the latter methods.

‍As far as businesses are concerned, a long history of poor customer service, the use of bailiffs, and aggressive tactics that operate on the outside lines of legality by old-school debt collectors have generated an insensitive image and indifferent to the public eye.

As such, this widespread debt stigma is a very real problem and only compounds the problem for customers who often find themselves in already difficult financial situations. Additionally, poor debt collection processes are simply not good for either party – customers may feel intimidated, helpless or discouraged and therefore may be less likely to clear their debt.

For businesses, this not only impacts their ability to stay afloat financially, but can also damage their reputation if customers speak of a negative experience or decide to leave.

Support vulnerable people

Debt is a very personal issue, and it’s something everyone has or will have to deal with at some point in their lives. Being personal in nature, it can be an extremely sensitive and stressful topic to discuss, even when people are at their most financially vulnerable.

As energy costs continue to rise, energy suppliers in the UK will increasingly have to tackle conversations with vulnerable people who are struggling to pay their bills or in arrears. debts. According to a recent study by Age UKthe elderly will be the hardest hit, with around 150,000 households expected to plunge into fuel poverty this winter.

When faced with sensitive situations like these, it is vital for energy providers and other businesses to identify vulnerable customers and help settle their arrears as soon as possible. This requires not only having a capable technology stack, but an engaged and empathetic customer service team with a strong support network, but most importantly, company values ​​that revolve around the well-being of your customers.

Caring for vulnerable clients means going beyond the technicalities and providing practical and lasting help. Are there flexible solutions to help them repay their debts? Can you give them practical advice to avoid future pitfalls? Can you refer them to a specialist debt adviser? If a company can help a customer get out of a particularly difficult financial situation, it will only strengthen their relationship with the brand.

How Technology Helps Debt Settlement

Thanks to advances in financial technology today, it has never been easier for us to access our bank accounts, pay for goods and services, or send money to each other. Challenger banks such as Monzo, Starling and Revolution are leading the charge in this space, with apps that let us track our finances anytime, anywhere.

Access to credit has also become easier. Whether it is a loan, financing, credit card or BNPL product, we as a society and as an economy are fundamentally dependent on consumer credit. However, while the moves to get into debt are relatively simple, getting out of debt can be a whole different story.

This rings true in any industry, including the energy sector. For too long, companies have relied on outdated and counter-intuitive approaches to settling their debts, which only demonstrates a lack of consideration for the needs of their customers. This is precisely why we founded Ophelos: to use modern technology to help people feel empowered to settle their debts, on their terms.

It’s not about harassing or intimidating people until they can pay, but talking to customers the way they want to be spoken to, on a date and at a time when they feel comfortable. comfortable engaging with us through a digital or non-digital channel that they prefer. For example, we use machine learning to determine the best way to communicate with a customer facing debt. This means that formal communications between debt collectors and bailiffs are replaced by the most convenient and effective way to engage with customers, whether that be email, WhatsApp, SMS or post. Through our platform, customers are then able to settle their debts anytime and anywhere with more affordable repayment plans.

This approach is also having a positive impact on businesses, as more customers choose to self-serve, reducing the need for manual intervention by staff. In fact, 88% of our customers never speak to our customer service team. At a time when many organizations are struggling with resources due to COVID, increased call volumes and staff attrition, triaging customers to the right outcome without human intervention is critical. crucial importance.

While this may be a longer-term solution, energy providers should consider what technology they can implement to help their customers feel more empowered in settling their debts and improve their operational processes.

Deepen customer relationships

Overall, energy providers are likely to be in the spotlight over the next difficult months. While keeping their business afloat is a priority for most, they also need to think about how to keep their relationships with their customers intact and, in particular, how the dispute resolution process debt can play an important role in maintaining their reputation and brand values.

Amon Ghaiumy is co-founder and CEO of Ophelia.


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