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The Liquidity Challenge: How Automation is Proving Itself in Collections

The Liquidity Challenge: How Automation is Delivering in Debt Collections

Mark Oppermann

The collections industry is going to be at the fore front of managing the consumer debt tsunami in the coming months and radical changes will be needed to make the industry itself capable of meeting this challenge in a sustainable way.

As we come to grips with the new reality of the world we now live in, the economic impact/devastation has taken a back seat to public health and safety up to this point. But as we carefully manoeuvre our way out of lockdown the conversation has moved to how do we regain our footing and see viable businesses reopening and for some reinventing themselves to ensure that they can return to some level of sustainable trading.

As we all know, this is not going to be an easy task, as sustainability will be for many businesses out of their control due to the government personal health guidelines. I can't think of one business that isn't going to be affected from offices, department stores, small cafes even local taxi services. The world as we know it is forever changed.

The figures vary depending on where you look but all observers agree the unemployment rate is going to be significant come the latter part of the year when all government wage supports are most likely tapered out. The reality of the true economic landscape facing us will be only fully apparent then, don't be surprised if the unemployment rate goes above 12% and to give this perspective the rate for the 3 months up to March 2020 was 3.9%.There will also be millions of workers who will be the "lucky ones" who are working but many at reduced earnings so there's no real upside visible at this time.

The Liquidity Challenge

There is no doubt that the word “liquidity” will be on everyone’s lips in coming months both from a business and personal sense. The concept is simple with one question being asked “do I have enough money to do the things I need to do?” shopping, petrol or trade creditors it doesn’t really change the calculation needed, income vs expenditure. In all too many cases the gap between these two figures will be a significant with expenditure far exceeding income. That’s a problem!

The liquidity challenge is one that the collections industry will need to understand and embrace fully if they want to continue to trade successfully. And those companies best equipped to deal with all the liquidity issues of their customers will undoubtedly be the winners.

The importance of good communication has been always been a basic tenant of any successful relationship as applicable in business or our personal lives. The ability to manage good communications can be explained in one word “conversations”. The dictionary definition of conversation states “talk between two or more people in which thoughts, feelings, and ideas are expressed, questions are asked and answered, or news and information is exchanged”

Companies that embrace the art of conversation and nurture their customer relationships will  have undoubtedly have more and better conversations with their customers. Ultimately these companies will be the ones that succeed.  

The art of marrying these two elements - liquidity and customer conversations is key to navigating these unchartered waters.  

So, what are Liquidity Conversations – They are the conversations that you will be having more and more of getting to understand the economic situation for each customer and advising, helping and guiding them with good advice, mapping out their options to help move them into a better place from a financial perspective. No matter what way you look at it these are difficult conversations.  

How fit is your business to do these properly today? I would suggest many people would not be able to answer that with a resounding yes and if it’s not a resounding yes, what happens when the volume of activity increases, as it will undoubtably. Many businesses have seen their infrastructures creak, crack and fall over some times over the last few months with the volume of customer contact, that isn’t going to change anytime soon.

Where Does Automation Come In?

You may have noticed automation is in title but it hasn’t been mentioned yet and that’s for the very specific reason. All too many times my business engagements are immediately drawn to discussing technology without a full appreciation of the actual business need. Technology is there to help you deliver on the “Job to be Done” with the focus ideally being on the business benefits. The critical thing at this stage of any planning is keep it simple Gall’s Law being very appropriate “Gall’s Law states that all complex systems that work evolved from simpler systems that worked. If you want to build a complex system that works, build a simpler system first, and then improve it over time. This is essential when thinking about automation of the customer journey as I haven’t been involved in any successful customer engagement automation projects yet that didn’t have lots of iterations following learnings and knowledge from initial customer usage, it’s unlikely you’ll get it perfect first go.

Automation is Proving Itself in Collections

There's lots of buzz words and acronyms like AI, ML, RPA & Bots to name a few but whatever you call them they are hard at work in the collections industry today. I have seen many clients over the past 12-18 months really get going with automation in their collections activities which is great to see as the collections industry as lagging behind when adoption rates are compared with other industries. This Automation growth has been helped massively by the increased usage of conversational messaging over SMS, WhatsApp and other digital channels. Conversational messaging and automation are the perfect partners for each other and the results are impressive. Automation isn’t a binary decision as where Automation can’t or shouldn’t operate that’s where your existing agents get blended into the conversation. Companies should expect to have the capability to automate circa 40% of their collections conversations within a 3 to 4 month period, the easiest place to start is the ID&V and move on from there. I have clients giving me feedback on achieving above 65% automation on customer engagements. Impressive figures but don’t be afraid about the costs either as most Automation is delivered via a usage model an example of this being Google’s Dialogflow, super easy for non-technical people to use and train the “Automated Agent” and only pay for what you use. The training aspect is something that you should factor highly into your considerations when looking at  Automation, ideally you should be able to train the automated bot to get better and better with usage, believe me it makes an incredible difference in the longer term for delivering on-going success.                  

Automation will be essential for you and your business as others around you will be reaping the benefits. The liquidity challenge is going to be an enormous opportunity, get your business into shape to deal with it now. Placing Automated Conversational Messaging as a key pillar of your contact strategy will be a very wise move.     

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