Many consumers ‘defaulting over billing and poor service’

An increasing number of consumers are defaulting on payments even though they have sufficient funds to cope, according to recent research.

A survey of 1,500 people carried out by Echo Managed Services found that 48% had withheld payments because of customer service or billing issues. Nearly 1 in 8 people had refused to pay an invoice because it was incorrect, 1 in 20 because the bill was difficult to understand and 1 in 20 because they had received poor service.

Less than 1 in 3 said failure to pay was due to lack of funds.

The survey also showed a difference in approach between people from different income groups, with 1 in 10 of those earning £40,000 a year having withheld payment compared with just 1 in a 100 of those earning under £10,000.

Monica Mackintosh, customer services director at Echo Managed Services, said: “There are many reasons why people might not pay a bill and although a lack of income would be the obvious reason, our research clearly indicates that these days debt cannot be attributed solely to financial circumstances.

“Consumers are now much more aware of their rights and have the freedom to exercise them. They might be less tolerant of poor customer service or inaccurate billing, or think that failing to pay won’t necessarily lead to debt collection procedures, for example.

“That’s why it’s so important to understand customers and their reasons for missing payments so that the debt can be mitigated before it becomes an issue, or be resolved as quickly as possible. Making sure bills are clear and accurate, regular pre-bill customer engagement, and early intervention such as payment reminders are essential.

“In addition, a range of internal and external data sources can provide a strong indicator of customer behaviour and propensity to pay. But data alone does not provide the answer and should be used to support personable and empathetic customer service to ensure customers receive a positive experience.”

Please contact Gavin O’Donovan if you would like more information about the issues raised in this article or any aspect of debt collection and credit control.