In my opinion, the biggest frustration within a collections environment that is not measured or challenged enough is the amount of outstanding debts that remain on a ‘query’ status throughout the whole lifecycle of an account. At any one time there are billions of pounds worth of unrecoverable ‘on hold’ debt in the UK and to address this problem, a drastic change in how these are managed needs to take place.
Query loops are usually created when outsourcing unpaid debts to a third party; such as a debt collection agency (DCA).
With this escalation and subsequent transfer of contact there will be a significant volume of accounts that generate a query and become uncollectable until resolved. This becomes incredibly frustrating for the customer when the original query has not been dealt with adequately (as they are passed from agency to agency in a never ending cycle) whilst significantly impacting the creditor’s overall recoveries.
So, what causes a query loop? Here is a common example:
1. Originator fails to make contact/reach a resolution with their customer and outsources the account to a DCA.
2. The DCA gets in touch with the customer, who raises a query.
3. Due to inadequate information, lack of product knowledge and limited or no access to real time evidence, the query is passed back to the originator for investigation.
4. Once the originator’s response is received, the DCA attempts to re-engage with the customer once again.
5. In the majority of cases, further contact is unsuccessful and due to certain factors such as time restrictions/focus on profit margins, they are forced to return the account to the originator.
6. Invariably the originator will recycle these accounts to their secondary placement agency and the query loop debacle is set in motion.
How big is your LOOP?
The CSA’s latest DGI data suggests that £26.5 billion is currently held in management by their members and in my experience, up to 10% of all outsourced accounts may be embroiled in this loop. This could equate to an average of £2.65 billion of uncollectable debt stuck in a query loop at any one time. It won’t be difficult to work out what value this equates to for your organisation but I guarantee that it will be substantial.
Limiting these query loops comes hand in hand with the overarching desire to provide fair outcomes throughout the lifecycle of your Customers Journey.
In a perfect world we strive for...
• One contact
• One resolution
• One payment (if applicable)
Of course your customers may still refuse to pay once the query has been adequately resolved, but that’s a different issue altogether.
Themis Global provides ultra compliant, controllable and cost effective re-engagement solutions to clients across every industry sector.
• Significantly increased Customer engagement and retention (up to 50%)
• Average savings of 70% on current collection costs
• 100% of conventional outsourcing compliance risk eliminated
• Full control and oversight retained at all times
• Improved Customer journey and elimination of query loops