This article takes a look at the debt collection industry trends we predict will be seen as UK business gets back to normal post the Covid-19 pandemic. Credit-management teams across the globe will be hoping for an ease from the pressures of maintaining cash flow during the pandemic. However, post Covid-19 the business world has irrevocably changed. Corporations have had their eyes opened to the importance of building resilience to prepare for the unexpected. With liquidity one of the key factors to building resilience, accounts receivables are likely to remain in the spotlight for the foreseeable future.
For credit management teams this increased focus will provide both opportunities and challenges. There will be substantially increased pressure to improve DSO and ensure the delivering of working capital targets. However, there is also likely to be greater investment and support in the delivery of these targets. This is likely to have far reaching consequences for credit and collections teams.
Our 2022 predictions include:
- Increasing consumer and commercial defaults
As government support starts to unwind in 2021, it is widely predicted that many businesses will find themselves in financial difficulty in 2022.
For consumers rising inflation driven by the massive increases in energy costs are going to have a dramatic impact on cost of living for both lower- and middle-income households.
- Move away from traditional siloed operating models.
Businesses’ will need to move beyond traditional functional team structures and reimagine processes from end to end if they are to remain competitive in the new normal and beyond.
- Increased digital transformation
In 2022, with an optimistic but high-risk economic outlook, it will be more critical than ever for businesses to ensure effective cash generation – and the efficiencies delivered through automation software solutions are without question. Businesses that fail to transform will be left behind.
Covid-19 is a cataclysm, but also an opportunity to change mindsets and kick off a digital transformation that will help businesses thrive after the crisis. In this context, focusing on the order to cash process is more than ever key to manage the generation of cash and prepare to thrive in the next “new – normal.
4. Greater Automation
Tied to the forecast growth in digital transformation is greater automation within the order-to-cash process. AI machine learning will enable the automation of repetitive tasks and allow the human workforce to focus on the areas where they can really add value.
5. Growing Focus on Customer Outcomes
Businesses now understand that most people do not accumulate unmanageable debt out of choice, and that when they do would far rather settle it if they are given the opportunity and means. It is therefore only logical that the credit management industry looks to adjust existing techniques to help customer resolve their debt position rather than just collect on it.
6. Greater Outsourcing
The shift to remote working during the pandemic businesses have had to overcome these issues to maintain business continuity. Now they have made the leap for internal teams, the step to accepting the support of external teams has shortened. With the continued pressure from the board to maintain cash flow, increased outsourcing to bridge inhouse resource gaps seems likely – and will potentially include a growing percentage of businesses which have never previously used an outsourced credit management or debt collection provider.
Author: Ashley Barratt – CEO Barratt Smith Brown
Leicester based Barratt Smith Brown, has established a strong reputation for providing market-leading debt collection support to the utilities sector. Leveraging CEO Ashley Barratt’s 15 years of experience at Centrica, they have not only provided outsourced support to key industry players such as Business Stream, Bristol Energy and Shell, but have taken a lead role in managing collections for UK energy administration collections – handing over 75% of energy administration cases since 2018. Their expertise in energy administrations led to their key role in helping The Citizen’s Advice Bureau develop their Supplier of Last Resort – Good Practice Guide.