Fintech TrueAccord explains why not having the right collection partner can “equate to missed recovery opportunities tomorrow.”
TrueAccord looks into what makes the end of the year such an important time “to evaluate your current collections partner.” TrueAccord comments on why firms need to evaluate their collection partner in Q4. And why/how we can all be better prepared for 2024.
Be Ready for the Aftermath of Holiday Spending
It should come as no surprise that consumer spending “typically increases in the last few months of the year—Black Friday, Cyber Monday, Super Saturday, Boxing Day, not to mention the expenses around holiday travel too.”
But last year marked “a particular surge in consumers putting a lot of that spending on credit, with 41% of Americans putting more than 90% of their holiday expenses on their credit cards, and one-third using credit cards for all their holiday expenses.”
With this heavy reliance on credit, nearly 42% anticipate “going into debt to pay for the holidays—especially when considering that US shoppers took on over $1,500 in holiday debt in 2022.”
It feels almost inevitable “that by the end of Q1 in 2024 some consumers will already be rolling over past the 90-day delinquency mark.”
To be ready, your debt collection should be preparing for Q1 late-stage collections now.
Get a Jump on Engagement Before Tax Season
Even though tax season may feel far off today, now is “the time to start preparing engagement strategies to reach and remind consumers to prioritize repayments when tax refunds come around.”
And this shouldn’t be “a novel concept to customers already dealing with debt: surveys find one in five respondents intend to pay off their holiday spending bills with federal tax refunds.”
In 2023, 44% of Americans reported “earmarking their refunds to pay off their debt overall, according to the CNBC Your Money Financial Confidence Survey.”
Although paying off debt is a priority, 34% of those surveyed said “they were worried their refunds wouldn’t make as big of an impact due to inflation/rising costs while still reporting that their tax refund would be critical to their household finances—don’t let your collection partner show up late to the competition when consumers are allocating those tax refund dollars.”
Bottom line: many consumers will “likely fall into debt in Q4 due to holiday expenses, but being prepared to engage them come tax season can help influence opportunities to secure repayment as we roll into 2024.”
Why Opt for Digital Outreach? To Meet Consumers Where They Already Are
Your collection partner needs to be “prepared for when and where your customers are ready to engage. And after the holidays and gearing up for tax season, many consumers are already active online—so don’t miss the chance to engage them through digital outreach.”
By the numbers, consumers are primed for digital communications in Q4 and Q1 considering:
- In 2022 online holiday sales rose 3.5% year over year, marking the largest ever online holiday season
- 68% of Americans report they pay more attention to emails from companies during the holidays