In 2005, £10bn of unpaid bills was written off by utilities companies, financial institutions and telecoms operators in the UK. These companies share common ground: they are owed money by customers for loans and credit cards, or they provide services in advance of payment.
This figure comes from research by Talgentra. We questioned 545 senior managers responsible for revenue collection regarding last year’s write-offs, as well as the expected write-offs for 2006. We then asked them what systems they were putting in place to improve the situation.
Some shocking statistics were uncovered: every company questioned admitted to writing off unpaid customer bills in 2005, with 55 per cent of companies writing off between five and nine per cent of revenues. And respondents expected the situation to get worse: 98 per cent expected to see an increase in the number of customers with repayment difficulties over the next 12 months.
The use of technology and better integration of existing IT systems with specialised applications, such as Customer Revenue Management (CRevM), are the most important factors in increasing revenue collection.
However, most organisations are not using specialised systems to improve collection rates and increase revenues. At many companies, it seems that the responsibility for chasing unpaid bills is spread across a variety of departments and IT systems.
The rising consumer debt levels represent a strong growth opportunity in the channel for companies that have relationships with utilities, financial institutions and telcos, as well as other firms looking to enter these markets.
Specialised CRevM systems are already being used at companies such as British Gas, EDF and Vodafone. As a result of reduced write-offs and increased revenue collection, return on investment can be within 12 months, not to mention increased staff efficiencies through the automation of processes.
While a certain level of loss is an accepted part of lending on credit, what is not acceptable is failing to do everything possible to reduce this loss to an absolute minimum. Inadequate IT systems are no longer an acceptable excuse for not being able to bill and collect money from customers.
While all lenders budget for a degree of bad debt – and price their products and services accordingly – it is clear that just a half per cent improvement could add £1bn of extra profit onto the bottom line for UK consumer lenders.
Hans Hermann is channel director at Talgentra.
Nima Green asks what is driving public cloud uptake in Germany
In the wake of yet another lawsuit involving Oracle, we run through 10 of the vendor's biggest court battles
CEO Chuck Robbins says Cisco will use the Catalyst 9000 product range as a template for future launches
Today saw 14 of the UK IT channel's biggest hitters come together to determine the winners of CRN's WiC awards. But what does being a WiC judge actually involve? Doug Woodburn reports