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One positive to come out of the global pandemic has been a systematic change in debt collection. As COVID-19 lockdowns took hold, the entire economy had to rethink how to manage accounts in arrears. The Commonwealth government changed bankruptcy laws, and the debt collection industry (with the help of the banking royal commission) placed added focus on customer wellbeing.

"The result has been that our clients - typically large companies - have been less likely to sell debt," says Andre Smith, CEO of ASX-listed Credit Clear, which provides a digital billing and communication platform for their businesses.

"This means that our clients have been looking to us to provide a broader end-to-end service, starting with digital white-label solutions supporter by third-party collections and late-stage legal recoveries.

"We have already observed a material increase in volumes being referred by existing clients," Smith adds. This increase in volume was anticipated for two reasons.

"First, there has been significant pent-up demand created by COVID-related regulatory restrictions, particularly in essential service sector, such as water and electricity," says Smith.

"In addition to regulatory restrictions, many industries such as telecommunication providers, banks and toll-road operators elected to implement self-imposed limits during the lockdowns, creating a further backlog in accounts in arrears."

With interest rates and inflation rising sharply, additional pressures are likely to build through the economy- on corporates, small businesses and households. The multi-billion dollar debt collection industry is counter-cyclical, so expectations are that the next few years will be bumper years of growth. Indeed, an IBISWorld report released in February this year, estimates the industry will grow at 8.4 per cent in 2022, significantly faster than GDP.

"With an enormous backlog in accounts in arrears and a material uptick in new accounts falling behind, you might expect that the industry has been attracting new providers," Smith says.

"In fact, the opposite is true,"

Those operating in the industry that have been reliant on being able to buy debt have struggles, because with less debt being sold, the price has skyrocketed.

Also, collection agencies employing low cost international call centres have struggled to survive, because those offshore operations when disrupted by COVID-19 did not have adequate business continuity plans in place.

Onshore Australian centres fared better, proving more flexible and maintaining productivity while working remotely. Lastly, new digital providers (typically not profitable businesses) found the market moving against them and have not been able to access capital they need to keep operating.

" Credit Clear has acquired modern high-performing collection agencies, such as the ARMA Group [whose acquisition was completed in February], and through these agencies deployed and scaled our award-winning technology with artificial intelligence capabilities supported by tradition agency operations," Smith says.

"We are profitable, have a strong balance sheet and are growing quickly in terms of number of clients and revenue.

"Our technology has moved well beyond adding digital messages to the strategy. Today, Credit Clear's AI-driven workflows can be utilised at any stage of the billing collections process, can be fully white labelled, and programmed to the language set on the customers device, while choosing the best times, methods and messages to prompt fast payment resolutions. It can also be integrated with any type of payment gateway, including service like Apple Pay."

The ability to measure results and challenge different customer engagement strategies is a key feature of AI-driven digital platforms.

According CCR analysis:

• 80 per cent of customer payments are made within a day of engaging with the app
• 59,000 various digital treatments across multiple industry sectors have been deployed since inception
• All optimiser experiments have yielded and an average of 20 per cent uplift so far,

"In 2020, CCR introduced Net Promoter Scoring (NPS) to measure customer satisfaction with the platform," Smith says. "This was revolutionary for a business involved in debt collection to be measuring the satisfaction of customers.

"We are deeply conscious that customers engaging with our service, would often be experiencing financial challenged, which we know can have a significant impact on overall wellbeing.

"One of the things we are most proud of is that we have achieved a NPS score of +44 across our portfolios with well over 120,000 customers having responded. Some individual portfolios have seen an NPS as high as +65.

"To give further context, the industry benchmark NPS score for the financial services industry is +20, energy providers (+16) and real estate (+7), with Apple being +50."

Credit Clear says its main focus is the customer experience-the better the experience for customers, the better the repayment rates.

"Considering that we are asking people how likely they would be to recommend us when we have just asked them to settle their outstanding bill, I think a +44 score talks to how much customers appreciate being given the opportunity to resolve their accounts at a time of their choosing and in the method they prefer, be that digital or traditional."

This article was first published by The Australian Financial Review