How to help debt-laden consumers keep up with payments
A recent study commissioned by Western Union indicates that consumers are not responding to the increasing rate of personal debt lying down. The majority are actively seeking ways to regain control of the finances. This consumer mindset provides billers with opportunities to proactively help their customers/clients consider payment alternatives, thus lessening the likelihood of payment delinquencies. In this article you'll learn about the study that measured consumer attitudes and receive tips on communicating helpful information to your bill payers.
The emotional turmoil of debt
Conducted by Javelin Research, the Western Union® Payment Services Money Mindset Indexrevealed that forty-nine percent of consumers believe they are worse off now than they were six months earlier. Meanwhile half (fifty percent) are more stressed about meeting financial obligations. The stress of economic debt is pulling consumers' heart strings as much as their purse strings. Thirty-four percent report that debt is creating an adverse impact at home and work, namely:
- Nearly one in four (22%) say that meeting their financial obligations is negatively impacting
- their family life
- 22% say their circumstances are affecting their relationships with their spouse or partner
- 17% claim that meeting their financial obligations has negatively impacted their work life
Good news: Consumers seek financial empowerment
Even with the emotional turmoil of debt, only five percent of consumers are considering bankruptcy and a mere eight percent are planning to default on bills in the next six months. They appear to be seeking financial empowerment through better employment, cutting back on expenses and utilizing smart financial strategies to keep them on track.
According to the Western Union® Payment Services Money Mindset Index:
- An optimistic 28% of consumers are seeking new jobs to improve their situations
- 22% are looking for secondary jobs
- 12% report that someone in their household has already taken on a second job
Accordingly, consumers are also changing their spending habits and improving their money management skills to ease financial and emotional burdens. Dining out is the number one expense that consumers have recently cut back, as mentioned by fifty-two percent of respondents. In the next six months, nearly 7 out of 10 survey participants (sixty-nine percent) plan to cut back on unnecessary spending and thirty-six percent will prioritize which bills get paid first.
What does this mean for billers?
The results of the study indicate that consumers are taking action and may be receptive to suggestions and alternatives when offered. This provides the opportunity for billers and their collections department to show leadership by offering avenues for help and guidance with bill payment and payment solution options.
Offering both assistance and additional options provides a win-win situation with you and your customer/client. It not only increases your ability to recoup payment in a timely fashion, but can improve the perception that your firm values it consumer relationships.
"Despite a shaky economy, confident consumers are becoming more savings savvy, learning to find other financial resources such as new employment opportunities, reorganizing their budgets and making payments that fit their current lifestyle and financial needs," said Royal Cole, executive vice president and general manager of Western Union Payment Services. "By being more resourceful, people can learn to efficiently tackle debt, protect their credit standing and even find a way to set aside funds for some discretionary spending."
Demonstrate your concern by offering tips
Through billing statements stuffers, call centers, newsletters, or whatever forms of communications you employ, you can demonstrate your concern and helpfulness by offering consumers the following tips:
- "Tip #1 -Save your credit score by paying, not delaying"
Remind your customer/client that late payments can negatively affect their credit. Rather than miss a payment, encourage them to contact your call center to discuss payment options and flexible due dates that may correspond with "pay day."
- "Tip #2 - Learn about a more convenient payment method"
Inform the consumer of your full-range of payment options. Whether it is automated EFT or paying bills using a walk-in cash payment services, consumers may not know all your options and may consider switching to a service easier for them where payments are processed fast and securely.