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As an energy supplier, what can we do about overdue customer debts?

With energy prices going through the roof, many suppliers will be facing problems with customers who can't or won't pay their bills. How do you separate the two and what can you do to minimise your risk of debts going bad?

The current energy crisis is not just a worrying time for those faced with rapidly rising bills. It's also a challenge for energy suppliers, who inevitably will be dealing with a large number of individuals and businesses at risk of defaulting on their bill payments.

With the whole country under pressure from soaring inflation and rocketing supply line costs, as an energy supplier you need to balance social responsibility with pragmatic business sense. That means understanding your customer base so that you can reliably assess their circumstances and ability to pay.

Individuals who are on low incomes or vulnerable may need help to ride out this unprecedented economic crisis. However, there will be high-net-worth individuals and businesses who have the means to pay, but who see an opportunity to exploit the situation, relying on the good will of suppliers to avoid settling their debts promptly.

So, how do you navigate this customer service minefield and come out the other side without seriously impacting your cash flow and putting at risk the profitability of your business? Here are a few tips...

How do you deal with low-income and vulnerable individuals?
When it comes to those whose personal finances are under real pressure, Ofgem rules give you less leverage than you have with businesses. Because you're obliged to negotiate a payment plan for any outstanding debt, good customer relationship management is key. That means reducing the risk of an unsustainable debt building up by keeping a close eye on customer accounts and encouraging customers to contact you at the earliest opportunity if they're struggling to pay their bills. Switching them to a pre-payment meter sooner rather than later will also help.

How do you deal with high-net-worth individuals and businesses?
Engaging with customers to assess their circumstances will enable you to separate the 'can't pays' from the 'won't pays'. If you've confirmed that there's no reason why an individual or a business can't afford to settle an overdue energy debt, then it's time to take further action, just as you would with any unsecured debt.

The threat of disconnection may be enough to do the trick. However, there's always the possibility that the debtor has left the supplied premises and, therefore, this threat is an empty one. In that case, the next step is to obtain a County Court Judgment. Once you have this in your favour, you can instruct bailiffs to take control of assets or use a Third Party Debt Order to seize funds directly from other sources, such as the debtor's bank accounts.

The need for speed
Whether you're dealing with a vulnerable person who's struggling to pay or a business owner who's protecting cash flow by delaying supplier payments, it's vital to act quickly. The last thing you want is for the amount owed to get any bigger. That would simply compound the problem and make the debt even harder to collect.

If you don't take early action, you may find it's too late to recover the debt effectively. The customermay have gone bankrupt or the viability of chasing the debt through the courts may be compromised by financial pressures on your own business.

Professional support and guidance
At Redwood, our experience and expertise in debt collection can be a real asset in these difficult times. Our proactive debt management service can help you stay in touch with your customers and reduce the risk of them delaying or withholding payments. We can also provide authoritative advice and guidance on the options available to you if you need to take things to the next level. Despite a highly challenging economic environment, we can help your business Grow Stronger.

Email us at info@redwoodcollections.com.

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