PAYMENT BEHAVIOUR IN LOCKDOWN TIMES

Elements of the analysis

The analysis focuses on the proportion of receivables that records a payment within 15 days after TCM’s first letter to the debtor (sample:> 100,000 receivables). This result is influenced by:

• The behaviour of the debtor, influenced by his motivation and his solvency;
• The characteristics of the receivables entrusted to us by creditors, including, in particular, the age of the receivables, the amount, the sector of activity and the sales process;
• The effectiveness of our efforts (except for B2C).

Consumer behaviour

With B2C, we have an ideal statistical situation where we do not take any action during the first 15 days after sending our first letter (as required by law). This means that any payment received in this period is due to this letter. Therefore, the quality of our telephone calls, visits to the debtor and other reminder efforts does not come into play. We also note that the content of our letter has not changed significantly over the past 5 years, except for the introduction of an informative text on the GDPR in 2018 and a QR code in 2020.

It remains that the other elements of diversity of receivables remain important (characteristics of receivables and behaviour of debtors).

The graph below shows the debts of consumers (B2C) resident in Belgium and with a debt of less than € 500. The graph shows the percentage of these debts that were paid within the first 15 days of sending our first letter.

• A first visual outcome is that there does not seem to be a month more conducive to payment than others. There is no seasonality of payments.
• The volatility of the results is surprising: we go from 5% (April 2016) to 25% (August 2018). This can probably be explained in a large part by the fact that we receive files with hundreds or thousands of B2C receivables, the ages and sectors of which vary. It is the influence of the creditor’s characteristics on the collection.
• Payments were more numerous in 2019 and 2020 (the two years being 16% overall on average) compared to previous years.
• There was no degradation in 2020.
• The trends remain similar if we reduce the sample by industry.
• The trends are equivalent if we measure the percentage collected in value collected rather than in number of receivables.
• For debts over € 500, the volatility of the results increases with the amount and the percentages paid within 15 days of the first letter decrease. But, 2020 keeps its good scores compared to previous years.

Business behaviour

With B2B, we remind the debtor more quickly (3 days after sending the letter). In addition, a first letter is often copied by e-mail to the debtor company. So, unlike the “<15 days” results from B2C, the B2B result also depends on our recovery work (phones, etc.).

As a result, we collect much more within the first 15 days of our interventions. In 2020, we had 41% of B2B receivables with payment (40% in 2019), i.e. more than double the B2C results with the same criteria (Belgium, <€ 500).

For the remainder, there is less volatility in B2B than in B2C, which is no doubt because these B2B receivables are not entrusted to us by batches of thousands of receivables but rather continuously, on a daily basis.

We also note that, as with B2C, the years 2019-2020 in B2B show better results than in previous years, that is to say that there are more cases with payment, especially within the first 15 days.

For large claims

We have a few receivables that exceed EUR 1 million, followed by increasing numbers as the amount limit is lowered. The majority of receivables over 50,000 EUR are B2B.

Statistical analyses are less relevant for receivables over 10,000 EUR because not only is there less volume, but there is also more variety in the causes of non-payment, especially for B2B.

We also manage receivables from debtors abroad. This is one of our specialties! Here too, the statistical analyses is more complex due to the variety of the particular situations in the different countries involved.

Conclusion

Our previous article showed that, in 2020, we had retained a volume of new receivables equivalent to previous years for B2B but recorded a sharp decline in B2C.

The analysis of this article shows that the payment behaviour in 2020 is like 2019, and that these two years are rather better than in 2016-2018. This applies to both B2C and B2B.

The causes of these findings may be that:

• Covid crisis economic support measures successfully combated the effects of containment measures.
• Overall, growth in some sectors partially offset the collapse of other sectors.
• Creditors have been more cautious in 2020.

We will do this analysis again in a year to see how the situation has evolved in 2021.

Any questions: do not hesitate to contact us!

PAYMENT BEHAVIOUR IN LOCKDOWN TIMES

Elements of the analysis

The analysis focuses on the proportion of receivables that records a payment within 15 days after TCM’s first letter to the debtor (sample:> 100,000 receivables). This result is influenced by:

• The behaviour of the debtor, influenced by his motivation and his solvency;
• The characteristics of the receivables entrusted to us by creditors, including, in particular, the age of the receivables, the amount, the sector of activity and the sales process;
• The effectiveness of our efforts (except for B2C).

Consumer behaviour

With B2C, we have an ideal statistical situation where we do not take any action during the first 15 days after sending our first letter (as required by law). This means that any payment received in this period is due to this letter. Therefore, the quality of our telephone calls, visits to the debtor and other reminder efforts does not come into play. We also note that the content of our letter has not changed significantly over the past 5 years, except for the introduction of an informative text on the GDPR in 2018 and a QR code in 2020.

It remains that the other elements of diversity of receivables remain important (characteristics of receivables and behaviour of debtors).

The graph below shows the debts of consumers (B2C) resident in Belgium and with a debt of less than € 500. The graph shows the percentage of these debts that were paid within the first 15 days of sending our first letter.

• A first visual outcome is that there does not seem to be a month more conducive to payment than others. There is no seasonality of payments.
• The volatility of the results is surprising: we go from 5% (April 2016) to 25% (August 2018). This can probably be explained in a large part by the fact that we receive files with hundreds or thousands of B2C receivables, the ages and sectors of which vary. It is the influence of the creditor’s characteristics on the collection.
• Payments were more numerous in 2019 and 2020 (the two years being 16% overall on average) compared to previous years.
• There was no degradation in 2020.
• The trends remain similar if we reduce the sample by industry.
• The trends are equivalent if we measure the percentage collected in value collected rather than in number of receivables.
• For debts over € 500, the volatility of the results increases with the amount and the percentages paid within 15 days of the first letter decrease. But, 2020 keeps its good scores compared to previous years.

Business behaviour

With B2B, we remind the debtor more quickly (3 days after sending the letter). In addition, a first letter is often copied by e-mail to the debtor company. So, unlike the “<15 days” results from B2C, the B2B result also depends on our recovery work (phones, etc.).

As a result, we collect much more within the first 15 days of our interventions. In 2020, we had 41% of B2B receivables with payment (40% in 2019), i.e. more than double the B2C results with the same criteria (Belgium, <€ 500).

For the remainder, there is less volatility in B2B than in B2C, which is no doubt because these B2B receivables are not entrusted to us by batches of thousands of receivables but rather continuously, on a daily basis.

We also note that, as with B2C, the years 2019-2020 in B2B show better results than in previous years, that is to say that there are more cases with payment, especially within the first 15 days.

For large claims

We have a few receivables that exceed EUR 1 million, followed by increasing numbers as the amount limit is lowered. The majority of receivables over 50,000 EUR are B2B.

Statistical analyses are less relevant for receivables over 10,000 EUR because not only is there less volume, but there is also more variety in the causes of non-payment, especially for B2B.

We also manage receivables from debtors abroad. This is one of our specialties! Here too, the statistical analyses is more complex due to the variety of the particular situations in the different countries involved.

Conclusion

Our previous article showed that, in 2020, we had retained a volume of new receivables equivalent to previous years for B2B but recorded a sharp decline in B2C.

The analysis of this article shows that the payment behaviour in 2020 is like 2019, and that these two years are rather better than in 2016-2018. This applies to both B2C and B2B.

The causes of these findings may be that:

• Covid crisis economic support measures successfully combated the effects of containment measures.
• Overall, growth in some sectors partially offset the collapse of other sectors.
• Creditors have been more cautious in 2020.

We will do this analysis again in a year to see how the situation has evolved in 2021.

Any questions: do not hesitate to contact us!