One-off opinions and contributions from accountancy's great and good.
Embracing debt collection consulting services
Elliot Howard, a director at software solutions specialist Sopra Group, explains how the results of a new survey into credit collection processes signal a potential market opportunity for the accountancy profession.
Nearly three-quarters of UK companies are experiencing a number of big problems recovering debt, while we must brace ourselves for an almost 20% increase in debt cases forecast in the next year.
Survey respondents said the debt collection process was slower, less successful and more resource-intensive, which perhaps is not surprising given the ongoing ‘overdraft’ at national and consumer levels. However this is still deeply troubling for companies trying to maintain cash flow and build a platform for economic recovery.
For small and large accountancy practices the implications are mixed. Expect deep and protracted problems with fee recovery, for certain – meanwhile, your own internal systems and processes may need attention. On the positive side, there is clearly a market opportunity here. You don’t need to offer debt collection services yourself, but clearly offering advice on debt collection and credit control should be part of your services portfolio.
So what would that advice look like? The sorts of issues you will need to advise on will be whether to replace and/or outsource systems to debt collection agencies (DCAs). Professionalism and good ethical practice are the watch words here.
The research commissioned spotlighted the IT problems experienced by in-house credit collection functions and debt collection agencies. This covered whether systems were able to handle current and future volumes, how well they integrated, automated and adapted to change, handled key debt collection tasks of segmentation profiling, worked with debtor profile analysis, offered comprehensive management information outputs and properly performed compliance challenges and reporting. Clearly you need to have some familiarity with the software available so as to offer help in this regard.
You will also need to advise on the key credit collection processes. Businesses need to get smarter at deciding who they lend money to (in particular the tasks of segmentation profiling, debtor profile analysis are vital) and on collecting monies owed (think workflow on different collection and litigation procedure, suited to various job roles).
The overall message of the survey carried out was that processes require some degree of re-engineering. However another key finding was that despite this, there is no clear “best way forward” for addressing these challenges. Surely, this has to be a call for help quality strategic consulting help around debt collection and credit control.
However grimly opportunistic this may sound, debt recovery may be the way forward for your accountancy firm in these straightened times and not an opportunity to be missed.