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Debt recoveries in times of Covid-19 Pandemic

In a relatively short time span, Covid-19 has had an unprecedented impact on the world economy. Projections by the International Monetary Fund (IMF) indicate that the global economy will shrink by 3% in 2020. In India, the RBI, alongside with major investment banks and rating agencies, have predicted a negative GDP (gross domestic product) growth in the current fiscal year.


Several Researchers have also indicated that there is a strong likelihood that COVID-19 will play havoc with the slowing global economy, impact key sectors, disrupt global supply chain, and reinforce an upward trend in global insolvencies.


The repercussions of COVID-19 on any part of the business ecosystems will cause the Banks and NBFC/NBFIs to:


· Have cash flow strains or insufficient liquidity

· Delay payments or default on payments

· Have their customers delay or default on payments to them

· Have their businesses shut down

· File for bankruptcy


The deterioration in the payment behavior of your customers can be part of the pandemic's collateral damage, and it could have a crippling ripple effect on your institution's cash flow. To minimize such risk, you will need to optimize your collectibles and limit bad debt losses as much as possible.


The Covid-19 crisis has exposed the lack of digital capability and automation in organizations, with many – in haste – trying to change inbound Interactive Voice Responses (IVR) to alleviate demand, stopping all outbound collections activity, and handling responses to government relief measures. There is an urgent question today facing all Financial Institutions globally: how to build more resiliency into collections and recovery operations?


Prior to Covid-19, Financial Institutes globally were looking into using Digital technology to improve their collections yield and help improve their bottom-line. The Pandemic induced Lockdowns have accelerated the adoption of Digital technology in Collections operations exponentially. Within 1 week of Lockdowns being applied, ENCollectTM customers have been able to restart collections operations using our unique Social Distancing features such as Click-to-call and Click-to-pay.


End to End Digital Collection tools (such as ENCollect) enable comprehensive management of collection operations, improve collection performance, and increase customer satisfaction even in a post-Covid-19 world. Banks and Financial institutions that are ready to expand their use of technology for their collection functions should consider the following four key objectives while choosing an appropriate solution for their needs:


· Resilient collections operations

· Lower the cost of collections

· Enhanced customer service

· Improve operations continually

· Optimize overall performance

It is important to note that these Collection tools do not replace the expertise of collections staff, but rather, enhance the overall performance of banks and financial institutions. Data analytics can provide an objective, mathematical framework for making better decisions, helping businesses achieve a higher level of performance in the current period of uncertainty and beyond.


Delivering a truly seamless customer experience for those experiencing financial difficulties is the Cure-all for most collections’ operations. Now is the time for collections operations to rise above the noise and strike. There is unlikely to be a better opportunity to grab an investment for your collection’s operation. Pulling together a clear and compelling vision for collections will help teams accelerate their digital transitions during the remainder of the year and onwards.


Having a debt collection tool like ENCollect, relaxes the burden on the collection team and accounting department, and ensures higher success rates. ENCollectTM is a SaaS platform that lets you upload, assign, and collect any outstanding debt with zero stress. With features like Collection Strategy, Automated Communications, Tele-collection, Field Collection & Powerful Reporting with Social Distancing features, it is your ideal partner for debt collection - Pandemic or otherwise!


References:

https://www.sumeruentiger.com/

https://www.sumeruentiger.com/encollect

https://www.ideasforindia.in/topics/money-finance/covid-19-and-debt-moratorium-conundrum-the-case-of-microfinance.html

http://www.lawstreetindia.com/experts/column?sid=444

https://atradiuscollections.com/global/optimising-debt-collection-amid-crisis#

https://www.pdt.co.uk/thought-piece/debt-recovery-during-the-coronavirus-covid-19-pandemic

https://www.fieldfisher.com/en/insights/debt-recovery-during-the-covid-19-pandemic

https://sasdaniels.co.uk/support-through-covid-19/dispute-resolution-and-debt-recovery/effective-debt-recovery-during-covid-19/

https://www.lexology.com/library/detail.aspx?g=58d0cd09-4a99-4dfd-bfed-6f9defc6c8c8

https://www.forbes.com/sites/rachelsandler/2020/10/02/white-house-says-trump-remains-fatigued-amid-reports-he-has-fever/#2f820934b275

https://www.geppsolicitors.co.uk/site/blog/dispute_ligitation_law/debt-collection-coronavirus-options

https://collectionhub.com/reimagining-debt-collection-in-a-post-coronavirus-world/

https://www.procollect.com.au/debt-recovery-during-covid-19/

https://www.theasset.com/article/41732/transforming-debt-collection-in-the-time-of-covid-19

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