Why 2021 can still be a good year for credit management


Why 2021 can still be a good year for credit management

COVID-19 has had a profound impact on consumers’ personal finances in 2020. Immediately after the first wave, the damage seemed somewhat limited, but it is now clear that the real economic impact will only be felt in 2021. How can businesses vaccinate against the financial symptoms of COVID-19?


Income, savings and the lack thereof

European consumers are spending a lot less. Still, it’s not necessarily that the money isn’t there. Overall, European consumers are fairly cautious about what the future will bring. This is evident in their spending patterns. In the Euro area, consumer savings have actually skyrocketed to almost 25% of gross disposable income during the first wave of the pandemic and remained as high as 22% in Q3. 

However, this is not the case across the board. While many Europeans have kept their jobs and have actually been able to pay off debts more easily during the pandemic, others have been made redundant and are facing an uphill battle against mounting bills. The latter group of individuals causes worry. It is estimated that, without a month’s income, 29.6 million people in Europe (8.7% of Europeans) would not be able to afford the payment of basic utilities nor a month’s supply of food (Bruegel, 2020). If the income drought lasts two months, that figure jumps to 41.6 million individuals or 12.2% of Europeans.

Where consumers live also greatly affects the direness of their personal situation. In countries like Croatia, Latvia and Lithuania, a 50% salary cut for two months means that individuals have trouble paying their bills. On the other hand, in countries like Belgium and Finland, a similar pay cut would only see 0.5% of individuals end up in vulnerable situations. 

Moreover, at the time of writing, there are 15.6 million unemployed in Europe of which it is believed that 1.7 million were added during the pandemic and that another 14 million could be added, if countries were to suspend emergency work schemes that keep people employed by subsidizing salaries. 

Credit management in times of COVID-19

The corona crisis has done a great deal of damage to the European economy. Hundreds of thousands of jobs have disappeared and a large part of the European population is struggling to make ends meet. A second wave is currently raging and there is a good chance that a third wave will follow before any of the very promising vaccines start to have an effect. The predictions for 2021 are therefore grim.

It is inevitable that the number of customers in arrears will increase in 2021. It is therefore important that companies review their debtor management in good time.

How do you ensure that, in times of crisis, customers continue to pay on time? How do you ensure that the dunning process increases loyalty instead of costing you customers?

I believe that the appropriate strategy should place the customer at its centre. Businesses must provide customers with personalized payment experiences. Furthermore, it is essential that debt collectors anticipate difficult situations and think along with customers preemptively, in order to come up with customer-friendly solutions that work.

3 steps to achieve better collection results in 2021

These are the same steps Mi-Pay uses to develop effective payment reminders. With over two decades of experience in the customer-friendly collection of outstanding invoices, Mi-Pay is a trusted veteran and a proven specialist within the field. 

Step 1 – Put the customer first
Make it more efficient and more user-friendly for your customers to pay by digitizing your credit management processes.

Step 2 – Personalize your approach

The next step is to increase your odds of success by offering multiple types of payment reminders that are personalized based on customer demographics, payment history and even literacy level. 

Step 3 – Think like your customer

Finally, but at least as important, is the availability of payment options. Provide your customers with a wide choice of payment methods (from debit card to Apple Pay) as well as the choice to either pay later or pay in instalments. This way, there will always be a solution that works out, no matter the situation. 


Have you already devised a COVID-proof debt collection strategy for 2021? I would like to hear what your ideas are. 

Chris Curd
Vice President of Sales

E: [email protected]
M: +44 7515083513