The topic of debt collection by councils hit the headlines again recently when it was revealed bailiffs were called in to collect debts by councils in England and Wales on more than two million occasions.
The Money Advice Trust, which runs National Debtline, said more could be done for the vulnerable in debt.
The charity said that enforcement agents, commonly known as bailiffs, were used to chase council tax arrears on 1.38 million occasions out of 2.3 million cases, the Stop the Knock report by the Money Advice Trust found. They were also used on 810,000 occasions for unpaid parking fines, 86,000 times for unpaid business rates, and on 50,000 occasions to recover overpaid housing benefit, the report found.
Joanna Elson, chief executive of the Money Advice Trust, said: “The growing use of bailiffs to collect debts by many local authorities is deeply troubling. Councils are under enormous financial pressure, and they of course need to recover what they are owed in order to fund vital services. However, many councils are far too quick to turn to bailiff action. Bailiff action should only ever be used as a last resort, and can be avoided by early intervention.”
Following the publication of that report, the team at Agilisys Revenue Collection has compiled eight top tips to help local authorities with their debt collection – and avoid overuse of enforcement agents.
- Many local authorities have a ‘one size fits all’ approach to debt collection. It is important to set collection strategies that are tailored to customer circumstances. Then, ensure you have strong data and MI team to manage the effectiveness of your collection strategies. Are some collection strategies costing you a lot, for very little return? It’s time to amend those strategies if so.
- Know your customer. Has the customer been a compliant payer and have recently stopped? This could mean they could have experienced a change of circumstances and need assistance to prioritise their current debts. Look after your customers. Are they in need of specialist debt advice, do they need breathing space to get their finances in order, do they understand what their priority debts are and which they should pay first?
- A strong and robust recruitment strategy driving the relevant skill set required. Do you incentivise your staff for good performance? A prize for good collections performance can be very motivational!
- Ensure you have access to good data. You need a view on how many customers you are likely to contact and when you contact them, do they have a propensity to pay.
- Use customer propensity scoring to drive your strategies. Keep the easier to collect debts in house, and chuck the harder to collect accounts over the fence to an established DCA such as Agilisys, who have the skills, experience and knowledge to secure payments
- Negotiate realistic repayment arrangements that won’t break very quickly. At Agilisys 80% of our arrangements do not break.
- Make best use of all collection channels. Understand which channel works best for each customer and continue to use that channel.
- Plan, do, check, act – review your customer journey on a regular basis. How can you improve in this area?