When Your Collections Process Breaks Down: The Hidden Costs of Fragmented Systems
Energy and utilities providers across the UK are facing a serious challenge: how to manage customer debt efficiently and empathetically in an increasingly difficult economic climate. Many of these companies have adopted modern systems, but a significant number are still struggling with fragmented and inefficient collections processes. This is not only frustrating their customers but also severely impacting their bottom line.
The Domino Effect on the Customer Experience
A disjointed collections process is a nightmare for the customer. It often starts with a single late payment, which then triggers a series of disconnected, impersonal and often automated communications. A customer might receive a generic email, followed by an aggressive text message, and then a confusing phone call from an agent who has no context of the previous interactions. This siloed approach makes the customer feel like a number, not a person. According to the Money and Mental Health Policy Institute, people with mental health problems are twice as likelyto be disconnected from their utilities due to these aggressive and unsupportive collection practices. This is a clear indicator that a "one-size-fits-all" approach is not just inefficient, but could also prove to be deeply harmful.
The core problem is the lack of a single, unified view of the customer. While some modern platforms are designed to centralise data and streamline customer management, many utilities firms are still operating with a patchwork of tools for collections, each with its own data silo. This forces agents to navigate multiple systems to get a full picture of the customer's payment history, account status, and previous communications. This fragmented experience not only leads to longer call times and repeat contacts but also erodes customer trust. The UK utilities sector consistently ranks at the bottom of customer satisfaction indexes, with Ofgem's January 2025 survey showing that only 29% of customers felt technology provided a consistent experience across channels (Ofgem).
The Financial Drain on the Bottom Line
The impact on a company's financial health is equally severe. An inefficient collections process increases operational costs and reduces cash flow. According to a report by Firstsource, for every £1 lost to bad debt, companies can incur up to £4.61 in total costs due to fees, lost revenue and labour. The failure to use a single, integrated system for collections means that data is often incomplete or out of date. This prevents companies from segmenting customers and offering them personalised repayment journeys. Instead, they rely on costly late-stage litigation and enforcement action
McKinsey research suggests that by reshaping their credit and collections processes, utilities can reduce bad debt charges by as much as 10%within a year. By integrating collections into a holistic customer management system, providers can gain a single view of the customer and proactively offer supportive solutions like flexible payment plans before debt becomes unmanageable. This approach not only improves recovery rates through early intervention but also enhances regulatory compliance and boosts customer loyalty.
Pega Collections: The Solution to Collections Chaos
The challenges of fragmented collections can be solved by deploying a dedicated, intelligent solution like Pega Collections. Pega is not just another tool; it's a strategic platform built to orchestrate and streamline the entire collections process, from first missed payment to final resolution. Pega Collections, implemented by its chosen delivery partner, Eclantiqx, allows energy and utilities providers to transform their approach to debt management and massively improve the customer experience at a crucial "moment of truth."
Improving the Bottom Line
Pega Collections directly addresses the financial drain by improving efficiency and recovery rates. It uses real-time data and predictive analyticsto segment customers and determine the best course of action for each individual. Instead of a one-size-fits-all approach, Pega can predict who is most likely to respond to a specific communication channel (e.g., text, email, or phone call) and what type of offer will be most effective (e.g., a simple payment reminder versus a flexible payment plan). This intelligent prioritisation allows companies to focus their resources on the most impactful interventions, reducing manual labour costs and accelerating cash flow. By automating repetitive tasks, such as sending reminders and processing payments, agents are freed up to handle more complex or sensitive cases, ensuring that valuable time is used effectively.
Massively Improving Customer Experience
This is where Pega truly shines. For a customer in debt, a collections call is a moment of high anxiety. Pega turns this "moment of truth" from a stressful confrontation into a supportive conversation. When a customer calls, the agent's screen immediately presents a single, unified view of the customer, including their full payment history, recent communications, and a recommended action based on their profile. This eliminates the frustrating need for the customer to repeat their story and for the agent to navigate multiple systems. Eclantiqx can configure Pega to automate the offer of personalised solutions, such as setting up a flexible repayment plan or a temporary payment holiday, without the need for manual approval. This empathetic, proactive approach reduces customer stress, builds trust, and increases the likelihood of a successful repayment. It transforms the customer relationship from adversarial to collaborative, which is essential for retaining customers and protecting the company's reputation.
Protecting Vulnerable Customers and Ensuring Compliance
One of the most critical aspects of Pega Collections is its ability to handle vulnerable customerswith both empathy and strict regulatory compliance. Ofgemand the Financial Conduct Authority (FCA)have clear guidelines on how these customers must be treated. The FCA defines a vulnerable customer as someone who, due to their personal circumstances, is especially susceptible to harm. Pega's platform is designed to identify and flag these customers using data-driven insightsand customer-reported information. Once identified, the system automatically applies specific rules to ensure the customer receives a tailored and empathetic experience. For example, Pega can
Enforce contact rules to prevent overwhelming a customer with multiple daily calls or messages.
Present agents with clear, pre-approved empathy statementsand flexible options, such as payment holidays or referrals to a specialist support team.
Maintain a detailed audit trailof all interactions, ensuring the provider can demonstrate full compliance with regulatory guidelines.
This personalised engagement is crucial because it goes beyond simply offering flexible options. It proactively guides the provider to do the right thing every time, preventing potential harm to the customer and protecting the company from regulatory fines and reputational damage. In conclusion, while fragmented collections processes continue to drain financial resources and damage customer relationships, a strategic investment in a unified platform like Pega Collections offers a clear path to improvement. It's a move from reactive, costly debt management to a proactive, intelligent, and customer-centric approach that not only improves the bottom line but also safeguards a company's most valuable asset - its relationship with its customers.
