DEBT COLLECTION ECONOMY IN 2020 COMPARED TO PREVIOUS YEARS

Comparing the 2020 debt collection economy to previous years illustrates the first effects of health security measures on the overall economy. 2020 is already the past, but like any story, this one can help us anticipate tomorrow. In this article, we analyse the volume of business. In a future article, we’ll look at payment inflow.

 

What do we want to measure?

 

How has the lockdown, entailing the closure of entire sectors of activity impacted trade? Our basic reasoning is that a debt collection company is dependent on the receivables that its customers (the creditors) entrust to it.

 

  • If the creditor loses turnover, he will necessarily entrust fewer cases.
  • If the creditor has less business volume, he may have more time to manage his receivables himself.
  • If our clients’ clients (the debtors) suffer from the economic downturn, they will pay later or never, and we will receive more claims to collect.
  • If the lockdown measures destroyed the income of some, the support measures limited this damage. But with what effect on economic behaviour?

 

It should also be remembered that only around 3% to 6% of invoices issued in Belgium are paid with a significant delay or remain unpaid in the long run. This figure varies from industry to industry and from company to company. This reminds us to be careful when attempting to explain economic trends from a small and variable window of business activity.

 

The volume of receivables entrusted by our customers

 

We noted an overall decrease in the number of receivables received from our customers: -33% in 2020 compared to the 2016-2019 average (sample> 100,000 cases). Our figures indicate a clear overall trend, but it is difficult to draw conclusions. The analysis is complex because:

 

debt collection claims inflow 2020

  • The distinction between B2B and B2C shows relatively stable figures in B2B and a very clear decline in 2020 for B2C.
  • We have over 2000 clients from various backgrounds. We have limited volume in health care and public utility companies (except to include our extensive network of schools). On the other hand, we serve a range of very large companies in all sectors (finance, industries and various services including audit firms and large international law firms), and many SMEs with a wide variety of activities.
  • If we do not work directly for restaurants or hairdressers – directly affected by the lockdown, we have customers who deliver to these sectors and are therefore affected by the closures.
  • We have direct customers in directly impacted sectors, such as passenger transport or breweries, professional cleaning, or events organization.

 

Moreover, the analysis of the consequences, for our customers of the partial or total loss of downstream activities, is delicate. Many of our clients have confirmed to us that they have lost sales, some have even fallen to 0 (travel sector, for example). And even schools have lost, up to over 50% of their billing for some of them. In short:

 

  • Some creditors have increased in activity, and therefore send more claims.
  • Some customers, whether growing or shrinking, are monopolized by emergencies related to sudden changes in their situations. This includes issues related to skyrocketing growth or sudden drops in sales, but also organizational issues such as the increase in home working or finding solutions to new problems.

 

Besides, we continued our marketing efforts. In 2020, new customers entrusted us with receivables, which makes the comparison difficult. On average, year in and year out, we have 14% of cases from new clients (27% of the amount of new cases). In 2020, we only had 9% claim from new customers in the year (27% in value).

 

  • This shows that we attracted SMEs and large companies in 2020 with mainly B2B invoices. Indeed, B2B receivables are for higher amounts, on average, than B2C receivables.
  • It also shows that we were not able to attract many B2C creditors in 2020, probably due to their situation following the crisis.

 

Conclusion

 

Overall, our claims acquisition figures confirm common sense: the economy slowed down drastically in 2020. But it is difficult to draw more detailed conclusions because:

 

  • We manage delinquencies from all sectors of the economy, each of which is interdependent with several others while some have grown in 2020 while others experienced a severe recession.
  • In addition, we only see a small part of our clients’ business, that of delinquencies. This part is variable within a set which is itself variable (of the overall turnover).

 

Our next article will deal with payment behaviour, based on our statistics.

 

You have questions? Do not hesitate to contact us.

DEBT COLLECTION ECONOMY IN 2020 COMPARED TO PREVIOUS YEARS

Comparing the 2020 debt collection economy to previous years illustrates the first effects of health security measures on the overall economy. 2020 is already the past, but like any story, this one can help us anticipate tomorrow. In this article, we analyse the volume of business. In a future article, we’ll look at payment inflow.

 

What do we want to measure?

 

How has the lockdown, entailing the closure of entire sectors of activity impacted trade? Our basic reasoning is that a debt collection company is dependent on the receivables that its customers (the creditors) entrust to it.

 

  • If the creditor loses turnover, he will necessarily entrust fewer cases.
  • If the creditor has less business volume, he may have more time to manage his receivables himself.
  • If our clients’ clients (the debtors) suffer from the economic downturn, they will pay later or never, and we will receive more claims to collect.
  • If the lockdown measures destroyed the income of some, the support measures limited this damage. But with what effect on economic behaviour?

 

It should also be remembered that only around 3% to 6% of invoices issued in Belgium are paid with a significant delay or remain unpaid in the long run. This figure varies from industry to industry and from company to company. This reminds us to be careful when attempting to explain economic trends from a small and variable window of business activity.

 

The volume of receivables entrusted by our customers

 

We noted an overall decrease in the number of receivables received from our customers: -33% in 2020 compared to the 2016-2019 average (sample> 100,000 cases). Our figures indicate a clear overall trend, but it is difficult to draw conclusions. The analysis is complex because:

 

debt collection claims inflow 2020

  • The distinction between B2B and B2C shows relatively stable figures in B2B and a very clear decline in 2020 for B2C.
  • We have over 2000 clients from various backgrounds. We have limited volume in health care and public utility companies (except to include our extensive network of schools). On the other hand, we serve a range of very large companies in all sectors (finance, industries and various services including audit firms and large international law firms), and many SMEs with a wide variety of activities.
  • If we do not work directly for restaurants or hairdressers – directly affected by the lockdown, we have customers who deliver to these sectors and are therefore affected by the closures.
  • We have direct customers in directly impacted sectors, such as passenger transport or breweries, professional cleaning, or events organization.

 

Moreover, the analysis of the consequences, for our customers of the partial or total loss of downstream activities, is delicate. Many of our clients have confirmed to us that they have lost sales, some have even fallen to 0 (travel sector, for example). And even schools have lost, up to over 50% of their billing for some of them. In short:

 

  • Some creditors have increased in activity, and therefore send more claims.
  • Some customers, whether growing or shrinking, are monopolized by emergencies related to sudden changes in their situations. This includes issues related to skyrocketing growth or sudden drops in sales, but also organizational issues such as the increase in home working or finding solutions to new problems.

 

Besides, we continued our marketing efforts. In 2020, new customers entrusted us with receivables, which makes the comparison difficult. On average, year in and year out, we have 14% of cases from new clients (27% of the amount of new cases). In 2020, we only had 9% claim from new customers in the year (27% in value).

 

  • This shows that we attracted SMEs and large companies in 2020 with mainly B2B invoices. Indeed, B2B receivables are for higher amounts, on average, than B2C receivables.
  • It also shows that we were not able to attract many B2C creditors in 2020, probably due to their situation following the crisis.

 

Conclusion

 

Overall, our claims acquisition figures confirm common sense: the economy slowed down drastically in 2020. But it is difficult to draw more detailed conclusions because:

 

  • We manage delinquencies from all sectors of the economy, each of which is interdependent with several others while some have grown in 2020 while others experienced a severe recession.
  • In addition, we only see a small part of our clients’ business, that of delinquencies. This part is variable within a set which is itself variable (of the overall turnover).

 

Our next article will deal with payment behaviour, based on our statistics.

 

You have questions? Do not hesitate to contact us.

Don’t wait another second – collect your money

Focus on your business, we’ll take care of your outstanding payments. Contact us to find out more.

Don’t wait another second – collect your money

Focus on your business, we’ll take care of your outstanding payments. Contact us to find out more.