Technology is the key to councils’ debt recovery

Aryza specialises in financial management software for businesses and public sector organisations. Its products for local government may just be the key to easing the difficult financial position many councils currently find themselves in.

Technology is increasingly being viewed as a powerful solution that can create a fairer and more streamlined way of working. Not only can these digital solutions better support and guide consumers, but they can also help to reduce the administrative burden associated with debt collection.

The cocktail of economic issues that local authorities are facing means that budgets are being squeezed harder than ever. The rising cost of living for households means that demand for services is increasing just as the funds to pay for them are diminishing.

This means that authorities must do their best to recover money they’re already owed. Collectively, there is estimated to be more than £5 billion in debt owed to the country’s local authorities that remains unclaimed.

Councils currently tend to use enforcement agents or bailiffs to recover money. The issue here is that this could be seen as a blunt and heavy handed method of dealing with council tax debt from people struggling with their finances.  It also runs the very real risk of simply pushing that individual’s financial predicament further down the line, contributing to their debt problems rather than dealing with the issue. It also may not actually do much to improve the authority’s collection rates.

Rather than apply the same approach to all instances where someone is in arrears to the council, it is much fairer and more effective to use a more tailored model. It is well established that debtors respond much better to a collaborative approach, where they feel their specific situation has been considered and various factors noted. They’ll then be much more likely to keep up with their payments in the future.

Aryza’s products for local government exist to do just that — provide a collaborative link between the council and the person in debt, so that they can be better informed about their current financial position. They can thereby be empowered to take control of it themselves, visualising their options and keeping the authority informed on how they are managing it.

Aryza uses data from credit bureaus and open banking to give a picture of each individual’s financial situation, affordability and vulnerability allowing you to adapt your collection approach to them automatically. The system is available via smartphone, PC or tablet, and shows consumers how much is owed and their choice of repayment options.

Rather than requiring them to wait on a phone line that is only available during office hours, they can use the system at any point, 24 hours a day, to work out a solution that they’re able to meet. With each repayment, it will then update — adapting to changing factors, such as a missed or altered repayment date or an event with financial consequences.

All of Aryza’s tools use a secure and very simple, easily understandable interface. Important when you consider that, as people use these systems for the first time, many will be worried or stressed about their predicament.

Simple questions are asked of each person, making it easy to enter information into the system — either via open banking or manually — which therefore builds an overview of their financial position.

Through analysis of an individual’s payment habits, the system identifies financially sensitive times of the month — such as the days before and just after a rent or mortgage payment is made. It then knows to avoid asking to collect a debt payment at that stage, judging the date when they will be best able to make it.

From the technical perspective of the local authority, the systems are designed to require minimal integration — able to be running within a matter of weeks. This will avoid putting extra strain on pressured in-house resources.

As Karen Emmett, Head of Consumer Product at Aryza, explained, this is how technology can make a big difference in how much owed money a council is able to recover.

She said: “More than 60%^[1] of people that councils send enforcement officers to, in order to recover debt, end up either facing continued enforcement action, take out extra loans or delay paying their other bills. So, it’s quite obvious that this channel isn’t an effective solution — both in terms of debt recovery and the welfare of residents.

“With Aryza, people are given various options to pay off what they owe or to say up repayment plans based on what they can afford. They have clear visibility of their situation and where they stand, and the efficiency of the software makes it a much more effective tool for local authorities to use in managing arrears.”

For more information on Aryza’s products for local government, visit https://www.aryza.com/government/