How Debt Recovery Businesses Use Data

 

As with most industries, the debt recovery sector is harnessing the power of data to improve and streamline their operations. In this article, we’re going to be looking at the ways in which debt recovery businesses use data in 2022.

 

Like most businesses, debt recovery companies are always looking for ways to improve their operations. Whether it’s to make them more efficient and save money, or to improve their service, there’s plenty to consider. Because of this, many are turning to advanced tech and big data to help them do just that. In this article, we’re looking at how business debt recovery businesses use data in 2022.

What is a Debt Recovery Company?

When a business is owed money by an individual or a company, they will usually employ a debt collection or debt recovery company to help them to recoup their losses. A debt collection company will usually begin by calling or writing to the debtor to advise them of their repayment options, which may include paying the debt in installments. Debt recovery companies are used by a wide range of small and large organisations in the UK, including the government. The UK debt recovery industry is valued at a staggering £1.9 billion, with yearly increases of around 17.5% in the last few years. If the debtor fails to comply with repayment, the debt recovery company may then threaten legal action or visit the debtor’s premises in order to seize goods to the value of the debt.

How do Debt Recovery Businesses Use Data?

Debt recovery companies use data in a few ways and, in this section, we’ll take a look at some of these:

Customer behaviour

Data can prove invaluable to debt recovery businesses in allowing them to predict which customers are likely to default on payments and which are likely to honour their responsibilities. Data powered by AI is able to analyse a customer’s history, as well as factors such as economic information, in order to present a picture of the debtor and an intelligent guess as to how they may behave.

Risk profiling

Data is a great tool in profiling the causes for delinquency in payments which, in turn, helps debt recovery businesses to find the best solution for the debtor. This increases the likelihood of repayments being made. Business debt can be caused by a number of factors and, while some of these factors, such as a poor quarter or the pandemic, may indicate that the company’s finances are likely to recover, other factors, like consistently poor profits or criminal activity, may show that that the business is doomed. This is extremely useful information for a debt recovery company in helping them to decide on the options which they will offer to the debtor.

Cost and efficiency

Often, a debt recovery company will spend a considerable amount of time chasing slippery debtors who are either extremely unlikely to pay or who have a long history of finding loopholes in the system to avoid repayment. For a debt recovery company, this is costly and time consuming, as a positive result is rarely gained. Data allows a recovery agency to identify the ‘easy targets’, for example, businesses which have a significant amount to lose if they don’t pay. This helps them to maintain a healthy cash flow and avoid wasting time and money on hopeless cases.

Segmenting accounts

The use of data allows the debt recovery company to better segment different types of debtors through the analysis of large amounts of information. This, in turn, helps in their sales and marketing efforts as they are able to pitch their services to clients based on in-depth insights about the client’s customers and potential debtors.

Asset analysis

As we’ve mentioned, one way in which a debt recovery company may recoup a client’s losses is by seizing assets from the debtor. While this is a common practice, it’s not always an appropriate one – for example, there’s little point in a debt recovery team turning up to a business’s premises if the building contains nothing of significant value. Data analysis allows a debt recovery company to analyse and assess the type of assets which a business is likely to have and to formulate a reasonable estimate of the value of those assets. This can then be used to decide whether or not asset seizure is a viable solution for that particular client.

Data and Debt Are Intrinsically Linked

The last thing any business wants is a visit from a debt recovery company. That said, in the face of the current financial crises in the United Kingdom, this will be a very real possibility for a lot of companies. It’s clear that there are many ways a debt recovery company can use data to ascertain the best course of action when it comes to their services. Do you think there are any other ways they may or could use data to improve what they do?