When it comes to debt recovery, is there a choice to be made between a fair outcome and collecting cash?
By working with consumers even closer than we all do today, and taking a more holistic approach, I believe we can achieve increased debt resolution which, in turn, is wholly compatible with both fairness and results. For example, where people can afford to pay, we should be seeking strategies to encourage more of them to pay. Equally, there may be individuals that can agree to a longer-term payment solution if more time and less pressure is applied. Then there is the subject of waste. If we find that a consumer does not have the ability to pay or they have a genuine reason for non-payment, surely we can save the cost of pointless activities and put our money to good use elsewhere. A fair outcome does not mean simply pleasing the consumer and it shouldn’t mean collecting less cash. In collecting cash fairly, I believe it will also be more effective in the long-run. So, is there anything stopping us doing this today?
I guess there is the matter of who pays for those cases where no cash is collected even if that is the fairest outcome. The favoured commercial model for the industry today is Payment by Results (the results being cash collected). Can this continue if we aim to achieve a fair outcome for all? Can we really ask agencies to invest in a customer care approach but only agree to pay when they collect any cash? So, does a fair outcome mean saying goodbye to commission rates?
Perhaps not. Is the issue the PbR mechanism or what the payment is based on? If cash is not the only desirable outcome, then why incentivise only this outcome? Should we consider paying (and being paid) based on the desired result – the fair outcome? In simple terms, should we pay for what we want?
I can’t help but feel that all this depends on a paradigm shift within the whole industry based on the belief that we can work together to make the debt industry better for everyone; that our industry can be both fair and effective.
By Charlotte Mather, Head of Third Party Commercial, TDX Group