Supporting customers early in their financial journey is essential for fostering trust, minimising risks, and ensuring positive outcomes. By adopting proactive strategies, offering tailored support, and maintaining open communication, businesses can prevent small challenges from escalating into major issues. This blog explores five effective ways to enhance debt collection practices while prioritising customer well-being and aligning with Consumer Duty principles.

1. Encourage open communication from the start 

Right from the moment a customer signs up, it’s important to set the tone for ongoing, open communication. Regular, friendly, and helpful messages and guidance can make all the difference if customers start to struggle. Establishing a supportive relationship early on creates an environment where they will feel more comfortable reaching out if they foresee any financial difficulties. 

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2. Proactively monitor account behaviour

Early identification is key. It equips you to craft strategies for customers showing signs of stress. To make this work, your collections software must be able to track and aggregate the early warning signs of financial distress, such as missed or late payments, over-reliance on credit, or frequent use of overdraft facilities. 

Once armed with the information, a subtle reminder or a friendly check-in before a payment is missed can alert the customer to the approaching due date, allowing them to raise any issues they might have with making payments on time. Collections teams are increasingly taking advantage of behavioural science tips to ensure messages land well and that language is appropriate and will be well-received.

3. Empower customers with information

You might be hesitant to raise the issue of debt too soon, but the reality is that the more informed customers are, the better prepared they will be to handle any challenges. Help customers understand both the consequences of missed or delayed payment and what support is available to help them avoid detrimental fallout if they run into trouble. A report by the Credit Services Association  found that:

Customers who are better informed about the reality of debt collection are better equipped to confront their circumstances.

‍Make it clear that support is available and that they won't face harsh penalties for addressing issues early on. 

4. Work with partners for additional support

Offering customers a range of resources isn’t just a nice-to-have – it’s expected. In addition to debt advice charities, financial well-being organisations, and budgeting tools, consider providing links to services that can help customers assess their financial health. Income maximisation services, for example, can help customers identify any benefits, grants, or discounts they may be entitled to. By connecting them to these tools, you help them get the support they need to make informed decisions that benefit their financial future.

5. Be flexible where you can

When you spot signs of financial strain, flexibility is key. You may be able to adjust a customer’s payment plan, offer a lower monthly payment, or provide a short-term payment break. This kind of flexibility can help prevent debts from escalating into something more serious. The key is to avoid a one-size-fits-all approach. Tailor solutions to the individual customer’s situation to reduce the risk of foreseeable harm and help them stay on track with manageable payments.

Why this matters for Consumer Duty – and for you

Intervening early isn’t just good for your customers – it’s good for your business, too. By supporting customers before arrears become an issue, you can help prevent debt from spiralling out of control, which leads to better outcomes for everyone. This approach aligns with the core principle of Consumer Duty: helping customers achieve the best possible result while avoiding foreseeable harm. It protects your customers, lowers the risk to your business, and can even reduce costs in the long run.