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The Impact Of Remote Working On Debt Collection


It is of course nothing new now. Long after working from home was once the luxury of those occupying senior positions in the corporate world, remote working has now become the new status quo for many. Such that a walk around, or commute to any of the big cities in the UK during peak hours now feels eerily peaceful, or for others missing in that familiar hustle and bustle of big city life. This blog below is going to explore that change in more detail, and more specifically how it has affected the commercial debt collection industry.


We are led to believe from having had conversations with professionals in the industry who worked in debt collection in the 80’s and 90’s that meeting clients routinely throughout the week, often in licenced establishments, over dinner and drinks, or drinks and drinks, burning through hospitality budgets like they were going out of fashion was just standard procedure. It was not innovative. In fact, in some circles we know that not doing that was seen as a sign of failure or under-performance.


We suspect that some readers of this blog will be reading this thinking that not much has changed in that regard. The extent to which this might still be applicable to some of our readers’ normal approach to work depends on a range of factors such as company size, the industry they or their clients operate in, what position they occupy within the company, their company culture, geographical proximity to their clients, their appetite for change and their health and safety measures in light of the pandemic to name just a few.


But we also know that for many, the idea of having regular, or even occasional meet ups with their clients, or their clients debtors if acting as a third party, is something of an unknown phenomenon not afforded to them, or maybe perceived as a waste of time and/or resources to others who rarely if ever engage in this kind of workplace activity. For some, they may have spent years working with some people, who they have only ever known by their voice on the telephone or communication style over email.


But not everybody sits neatly in to these two categories of course. The arrival of the COVID-19 pandemic in early 2020 in the UK gave way to some fairly dramatic changes to the way most people were being asked to work, at least for some time excepting a small group of people that were known as ‘keyworkers’. This meant people who were used to travelling to, and working in, an office was being asked to work from home and then later making use of hybrid working models which involved some but reduced hours spent in the office around their colleagues.


The key question we are interested in asking as part of this blog is how much, if any, has this change had on our ability to perform in our roles as debt collectors and credit management professionals. Furthermore, does any impact felt arise out of restrictions that have been placed on our ability to collaborate closely with clients, or debtors, or colleagues, or is it a combination of all of them all? Finally, has there been any surprising consequences because of those changes which we should be looking to implement more permanently?


First, we thought we might consider what current evidence has to say about the matter. From a business point of view, the picture has been less than pretty. The restrictions imposed upon them and the economy resulted in a record reduction in GDP between April and June of 2020 of nearly 20% and despite a relatively recent relaxation of the restrictions the latest GDP figures suggest that it is still 1.5% smaller than the pre-COVID-19 level. Company insolvency levels have also now reached higher levels than before the pandemic following the relaxation of measured designed to support businesses during this difficult period.


This could be interpreted in several ways. That businesses are not as easily able to meet their own financial obligations which will hinder their ability to pay their suppliers and therefore create a greater demand for credit management and debt collection professionals. Or it could also mean that individuals within the sector are also facing threats to their own job security due to the struggles affecting all businesses, even in the debt collection and credit management sector, aswell as a reduced ability to pay resulting in lower performance levels of debt collectors.


However, the question of how much of an impact remote working has had on this remains unanswered. For a sizeable portion of debt collectors, their primary collection methods of using emails, letters, and telephone calls will have been unaffected by such changes meaning that any changes in the landscape of their job role is likely to be less to do with the adoption of remote working and more to do with overall economic conditions. Yet, a backlog in processing civil court claims for money is likely to have affected the enforcement sector who rely on the courts to obtain enforcement orders.


Another disadvantage to the sector of remote working is the impact on processing times of the accounts payable function within the organisations that they are working with. With invoices still being posted to organisations, who are now operating with only skeleton staff in the office, they are often left unopened and unprocessed causing delays to payments with a recent report suggesting that statistics on the volume of company invoices being paid late had gone from around 10% to up to 30% following the arrival of COVID-19 and the introduction of remote working practices.


How about resources available to companies who work in the industry? Well, some research has been conducted on productivity levels of workers who have been asked to work remotely and although not conclusive, numerous studies have suggested that people have become less productive whilst working from home which will have had a further detrimental impact on performance levels and the usual KPI’s that debt collectors work to. Additionally, some of the tools that workers might be typically accustomed to using in the office that make their role easier such as scanners and photocopies are not easily transferred to a home working environment adding to the challenges faced.


However, there is often a counter view to be considered. Some reports have suggested that the majority of companies that have implemented remote working practices have observed an increase in the productivity levels of their staff. Additionally, in support of such findings, surveys of workers who have been asked for their views on their preference for flexible working arrangements have commented that they would prefer a flexible working arrangement over returning to a full-time office-based role which is likely to have a positive impact on overall wellbeing and motivation.


Finally, a shift towards more technology-based methods might have paved the way for efforts to streamline the debt collection process for some companies. Given that it is nearly 2 years since the start of the pandemic, it would be reasonable to suggest that companies have already had to undergo a great deal of learning new ways to adapt in their specific sector and old methods that might since have become apparently unreliable and inefficient could have been replaced with automations that have improved cash collection numbers, such as changing to e-billing processes over manual billing.

The likely truth is that the true extent to such sweeping changes is not yet to be fully revealed for quite some time. One thing is almost certain, that nobody can be certain of the direction or trajectory of the pandemic given the unpredictable journey that we have all been on over the last 2 years, and continue to be on now. However, what has also become apparent is that we have also shown ourselves to be more resilient and adaptable than some of us might have previously thought possible, enacting changes to businesses and entire industries which some thought would be unable to cope with such demands.


There is a great deal more to be considered when it comes to credit management practice, but we hope we have given you a brief insight into some of the important and contemporary factors that need to be considered. If you are interested in knowing more or wish to have a chat about a particular area of uncertainty that then get in touch for a free no-obligation discussion at www.jspcreditmanagement.co.uk or contact us on 01827 66820 to discuss your needs.

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