Talking about debt is never an easy subject to broach, especially during a global pandemic, when debts may be held by the vulnerable or those under significant financial strain.
Creditor forbearance and support provided to date has helped stave off serious financial difficulties for many, for the time being at least.
But have these actions only postponed the inevitable, leading many to predict a ‘debt tsunami’ that will peak in late 2021? What is the right balance between fiscal responsibility, to recover legitimate debts, and social responsibility, to protect the vulnerable?
The balance is ensuring that your debt strategy delivers ‘fair outcomes’ – simply meaning that those who can afford to repay debts do so in a sustainable manner, and those who are struggling or vulnerable, for whatever reason, get the right level of forbearance and support for their circumstances.
To deliver this, you need to understand the circumstances of the parties that owe you debt. The Government Functional Standard on debt states: “Organisations should use relevant sources of data and information to make informed decisions about a debtor’s individual circumstances.”
Many organisations use internal data to shape collections strategies and some enrich this with data from credit bureaux. But being able to interpret these isn’t simple, and is resource intensive.
Through our Debt Management Services (DMS) framework, the Crown Commercial Service has partnered with private sector specialist Qualco, which can compile these data sources together and robustly interpret them to enable an in-depth understanding of customers’ circumstances, facilitating maximum engagement, fair outcomes and, therefore, returns.
Add to this mix an experienced resource in the form of fully trained collections agents, regulated by the Financial Conduct Authority, who understand customer-specific circumstances and can create affordable solutions, and DMS completes the jigsaw.
With the full range of tools at your discretion, and the appropriate use of these, it is possible to achieve balance – to recover monies owed to you from those who can afford to repay, and to support those who need it.