News Article

Debt Management Plans – The Business Cost

 

Following on from last months occasional paper on ‘Consumer Vulnerability’ by the Financial Conduct Authority (FCA) CRS have this week conducted research into the direct costs of managing cases which are being handled by a Debt Management Agency (DMA) or Debt Management Charity (DMC).

To this end CRS have developed a cost model which explodes the myth that reacting to this type of debt costs very little to a business.  The typical recourse is to either manage it yourself, sell the debt or write it off, but, what is absolute is that this has a significant cost to your business.

From our recent research and survey we have seen that our clients spend approximately £101.58 per account when handling an overdue amount for any case on a Debt Management Plan (DMP).

Here are some further statistics:

  • The average life cycle of a case is 63 months from set up of the plan to it being paid in full.
  • The average payment of a case on a Debt Management Plan (DMP) with a profit generating DMA is £4.97 per month.
  • The average payment of a case on a DMP with a DMC is £5.13 per month.
  • An account will drop out of a payment arrangement on average every 8 months
  • 23% of cases receive or require an inbound or outbound call per month
  • Processing a payment takes on average 2 minutes per case per month.

 

We recognise that every business is unique, and the headline figure is based on an average payment value, debt amount and salary cost from our current portfolio. However, we have discovered that by adopting particular strategies and using advanced automation, typically half of those fees can be saved.  What is the result?  Bottom line additional revenue and profits for your business without compromising on the customer experience.

If you want us to provide you with a free detailed health check specific to your current circumstances and how we can help you reduce this cost please contact us by phoning our office on 01422 324 514