The economic impact of COVID-19 is apparent. After years of lockdowns and restrictions, a black hole was created in most finances, whether they be a business, consumer, or even a government.
In this blog, TEC Services Group experts look at the impact of the coronavirus on the 2023 consumer as well as what collections agencies must do to be prepared for an economic downturn.
Consumers are still recovering.
Nearly half of consumers in the United States have reported that their finances are still negatively impacted by COVID-19 and are still recovering. A shockingly small 8% of people whose income was originally reduced due to the pandemic have reported that their finances have recovered, leaving a massive number of families and individuals who are still in economic turmoil.
Concern about one’s ability to pay bills and loans by those who have been negatively affected by coronavirus has remained consistently high, with nearly three-quarters of consumers reporting they are struggling. Overall discretionary spending has also greatly dropped, from cutting back on savings for retirement to ending subscriptions and memberships.
The main point is this: people everywhere and their finances are still greatly negatively affected by the pandemic. But how does this affect collections agencies, and how should they be prepared for a continuous economic downturn?
How collections agencies need to respond.
Consumer focus has always been important; however, it’s never been more at the forefront of collectors’ minds. Collectors must make the right decisions, with the goal of the right outcome for the consumer.
Collections agencies must strive for brilliant outcomes to ensure that customers are getting the right outcome the first time, with satisfactory and fair service. In a time of financial struggle for consumers, collections agencies must be focused on driving an emotional connection with customers and helping them through their unfortunate circumstances.
Additionally, online meetings and digital collections processes have vastly increased. Some collections agencies are moving to cloud-based solutions, which TEC Services Group both offers and recommends due to the capability to make changes rapidly to meet customer demand while putting the customer’s well-being at the helm.
During the coronavirus pandemic, the federal government, as well as many state and local governments, have put special programs in place to protect consumers and limit the actions collectors may take. Some states have temporarily made debt collection seizures such as wage garnishments illegal for the time being, for example.
As the COVID-19 pandemic lingers on, and consumers are still struggling economically due to the pandemic, collections agencies have never had to be more hands-on than now. The customer should be coming first if they weren’t before, and collectors must be both vigilant and compassionate.
Does your collections business need help dealing with the impact of the economic downturn on consumers? TEC Services is here to help with our team of industry experts, beneficial solutions, Support+ services, and more. Contact us here to begin.