Itβs a grim outlook for the debt collection industry unless some radical process overhaul and technology spend is set in motion
- Debt collection getting slower, less successful and more resource-intensive, even as an almost 20% increase in debt collection cases is anticipated β but businesses are struggling to identify a βbest way forwardβ -
European IT services company Sopra Group, a provider of credit collection management software, has today released new survey findings indicating that three quarters of companies are experiencing a number of challenges in their collections process.
The enormous pressures on the debt collection function, saddled with an increasingly failing debt recovery infrastructure, combined with the expectation off a huge hike in the number of debt recovery cases has all the makings of a coming credit collection βPerfect Stormβ.
The survey, conducted by independent research specialists, Vanson Bourne during April/May 2012, targeted senior finance professionals in debt collection agencies, financial services and retail industries.
The survey reveals that the process of collecting money owed is becoming slower, less successful and more resource-intensive β and worryingly, this crisis situation is expected to worsen, with respondents anticipating a 20% increase in debt collection cases in the next year. Thatβs to say the average increase is expected to be 18%, but staggeringly, 43% expect the volume to be even higher β over 20%,
The major challenges confronting those responsible for debt collection were identified as:
β’ 85% agree debt is taking more people/resources to collect
β’ 83% confirm debt is costing companies more than ever before
β’ 81% agree costs are escalating because debt collection is taking longer
β’ A further three quarters (74%) confirm margins are being impacted due to extended payment timeframes
The results strongly suggest that the current way of doing things isnβt working, yet overall there was no consensus on a βbest way forwardβ for addressing these challenges or meeting the feared increase either. Companies seem to be looking at attacking the problem on several fronts at the same time, with half looking at replacing and/or outsourcing (54%) their software solution. A similar number want to streamline and automate existing processes (54%), while just over half (53%) expect the solution will involve hiring more people.
Asked to name the greatest challenge in debt collection in the next twelve months, the response that came back repeatedly was the difficulty in actually recovering debt. The most common comment: βGetting people to pay is our greatest issue.β Thatβs a problem compounded by the recessionary pressures the country is under. One respondent sums it up: βIncreasingly, there are more debt cases that CANNOT pay, rather than simply won't pay.β
Overall the issue that respondents thought loomed largest was, echoing the tenor of the survey questions, the inadequacy of systems and processes and the lack of resources. Thus, βincreasing costs and overheads involved in collecting debts,β is a recurrent cry while βOur current systems are inflexible - making changes is very difficult/not possibleβ another.
Elliott Howard, Director at Sopra Software Solutions in the UK believes that the survey demonstrates the crisis that the industry as a whole faces. βThis survey has highlighted the fact that the challenges businesses face with debt collection are immense, and the debt collection situation is rapidly worsening. The high number of respondents recording big challenges here is extraordinary. Debt collection is absorbing more resources and increasingly becoming more complex and difficult. Added to this, the number of debt collection cases is set to increase at an alarming rate.
Itβs a grim outlook for the debt collection industry unless some radical process overhaul and technology spend is set in motion. Otherwise, business debt will become unmanageable.β
To underline the significance of the survey results, Vanson Bourne Research Director, Graham Opie, believes the results recorded in this survey carried out by his team are unprecedented in some of the strikingly high numbers it records β in particular on the challenges confronting those responsible for debt collection.
The full survey report is expected to be available mid-June. Register to receive your free copy here http://www.sopragroup.co.uk/creditresearch2012
Notes to Editors:
About the Survey
The survey was carried out on behalf of Sopra by research specialists Vanson Bourne, which conducted 100 interviews in April 2012: participants were invited using Vanson Bourneβs research panels within the Finance sector (35%), Retail sector (35%) and the Debt Recovery sector (30%). Overall, the seniority of respondents was very high β 2% of respondents were Chief Executives or Executive Directors, 70% were Financial Directors, Financial Controllers or Finance Managers and 20% were Collections Managers and Staff. Organisations were typically large turnover corporations; in broad terms a quarter had a turnover of under Β£5 million, nearly one-third had between Β£5 million and Β£100 million, leaving the remaining 44 percent having more than a Β£100 million turnover.
About Sopra Group
A leader in the European consulting, IT services and software development markets, Sopra Group generated revenue of 1.050 billion euros in 2011 and employs over 13,000 people. Thanks to a longstanding culture of excellence and strong sector-specific, functional and technological know-how, the Group offers its clients an end to end approach based on a well-honed business model. Sopra Groupβs ambition is to allow its clients to successfully execute transformation projects that will give them a competitive edge and help them drive growth. Sopra Groupβs savoir-faire encompasses prior strategic reflection through to the supervision and implementation of major IT and software programmes.
For more information, please visit our website www.sopragroup.com.
About Vanson Bourne
Vanson Bourne is a specialist IT market research consultancy, whose clients range from global corporations to small, highly specialised start-ups. Its goal is to provide research expertise and market insight using analysis and advice based on incisive and rigorous research into their market environment. These rely on the confidential contributions of qualified IT and Business professionals in organisations of all types, around the world. Its experience encompasses researching both IT and Business professionals in all business sectors and geographies from Europe to Africa and from AsiaPac to the USA.
For more information, please visit http://www.vansonbourne.com/
Carina Birt, Sarum PR
PR for Sopra Software Solutions
+44 1722 411150
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