It’s a grim outlook for the debt collection industry unless some radical process overhaul and technology spend is set in motion
- Debt collection is getting slower, less successful and more resource-intensive whilst anticipating an almost 20% increase in debt collection cases – businesses are struggling with inflexible, isolated and manual systems -
European IT services company Sopra Group, a provider of credit collection management software, has just released new survey findings indicating that debt collection is becoming a slower, less successful, more resource-intensive process – and the situation is expect to worsen, with respondents expecting a 20% increase in debt collection cases in the next year. Meanwhile, existing systems look unlikely to be able to handle the increase in debt cases. Only 30% are confident their system will cope with the coming extra burden, as both UK businesses and consumers continue to struggle to pay their debt.
The enormous pressures on the debt collection function, saddled with an increasingly stretched debt recovery IT 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 ‘Perfect Storm’.
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.
Respondents cite the fact that the debt collection is slower, less successful and more resource-intensive - this is the backdrop against which there is an almost 20% increase in forecast debt collection cases in the next year - with 43% of respondents saying they expect volumes to increase by over 20%.
The data strongly suggests that technology systems just aren’t coping and that existing debt collection systems look unlikely to be able to handle the increase feared. Only 30% are confident their system will cope with extra case loads, too many manual processes hamper others (29%) and a lack of integration (34%) is also seen as a challenge.
The survey also suggests that segmentation or profiling processes are far from perfect, with only a quarter (26%) describing their segmentation profiling as “fully optimised”. It also highlights a two-speed performance issue around the ability to undertake analysis of debtor profiles, with slightly over half (52%) giving their debtor profiling a positive appraisal, while another almost half admit there is “room for improvement”.
Finally, when asked about debt collection systems, three quarters of those polled admit some difficulty in demonstrating compliance with industry regulations, with 24% struggling with the task, 33% partly able to demonstrate compliance and a significant 19% acknowledging the need to address this more fully.
What’s really worrying is that businesses seem to lack any clear notion of a remedy for addressing these challenges -. 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.
Overall the issue that respondents thought loomed largest is the inadequacy of systems and processes and the lack of resources. Thus, “Our current systems are inflexible - making changes is very difficult/not possible” one business told researchers while “better technology, being able to manage our entire debt portfolio, more automation” 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. “This 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.
“It’s 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.”
Underlining 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 – 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
Editors and journalists are invited to contact Sopra’s PR, Carina Birt, on email@example.com or 01722 411150 for results and additional commentary, graphs or to arrange an interview with Sopra
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 Bourne’s research panels within the Finance sector (35%), Retail sector (35%) and the Debt Recovery sector (30%). Overall, the seniority of respondents was very high – 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 £5 million, nearly one-third had between £5 million and £100 million, leaving the remaining 44 percent having more than a £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 Group’s ambition is to allow its clients to successfully execute transformation projects that will give them a competitive edge and help them drive growth. Sopra Group’s 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
+44 1722 411150
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