Increasing numbers of Bankruptcies & IVA's are changing the marketplace

A market review conducted by Credit Style has identified that lenders are moving away from customer acquisition at any cost & towards maximising product penetration and profit from their existing customer base. This is in part fuelled by the growth in Bankruptcies and IVAs, and against a background of rising interest rates.

Many organisations are rethinking their attitude to credit & risk as the marketplace changes. Assisting customers during early arrears or pre-delinquency can reduce the flow of accounts into the debt management cycle. To do this, there needs to be a fundamental understanding of the customer base and what tactics will work for specific clusters of customers.

By matching collections strategy to customer circumstances, cost of collections is minimised and, if there is little chance of recovery, this can often be established early in the process and alternative action taken.

Differentiating between different customer segments is therefore crucial. The 'one size fits all' approach is not longer acceptable. With increasing levels of indebtedness, analysis of a customer's previous payments history together with other internal and external data to establish whether a customer is likely to be in real difficulty is becoming increasingly important.

Organisations need to be flexible enough to react to ever-changing economic conditions and proactively manage customers through changes in lifestyle. If you get it right, the collections department can be the most profitable area of the business by reducing arrears and keeping provisions at an acceptable level.

For more information please contact us.