5 Ways to Make Debt Collection More Equitable
Customer payments are the primary source of revenue for most local governments and utilities. Many communities are finding ways to collect this much-needed revenue with equitable approaches that don’t disproportionately burden low-income households.
It’s a complex issue, and there’s no one-size-fits-all solution. Below are just a few ways to use technology to improve debt collection, by making payments more accessible, convenient, and transparent.
For a deeper dive, watch our webinar on the topic. In it, we discuss ways to approach data collection and analysis about the needs of varying demographics in your community, as well as examples of how other cities and counties have addressed debt collection.
1. Promote assistance programs where people pay their bills.
There are resources available for people who need help paying their bills, provided at the local, state, and federal levels. These may include benefits for specific populations like veterans or senior citizens, tax deductions, ways to appeal a fee, or assistance programs like LIHEAP that help low-income households with their energy costs. Help your customers find these programs by presenting relevant resources in the same place a person finds their bill — as a related resource online, an easy web application to enroll, or a simple survey preceding payments.
With the right technology, you can begin predicting which customers may need extra support, and suggest tailored benefits automatically. For example, if a household is enrolled in SNAP benefits, you can proactively provide them information about other financial assistance they may qualify for, and automate parts of their application using validated information they’ve already submitted.
2. Make it easy to enroll in payment plans.
Some people may find it easier to pay small amounts toward their bill rather than paying it all at once. Promote payment plan options in the same place where you inform people how to pay. The execution of a payment plan can be as simple as letting people fill out a form to request payment installments, or as sophisticated as having people securely store a preferred payment method and enroll in auto-payments toward their bill.
3. Provide a free way for people to pay their bills.
Many governments and utilities charge a service or convenience fee to offset credit card processing cost. Give your customers a way to pay their bills without incurring additional fees. This may include offering an online checkout option for people paying by bank account (ACH/eCheck), or an in-person way for people to pay using cash. (For example, CityBase payment kiosks never charge a fee for transactions made in cash.)
4. Be transparent about penalty fees and how to avoid them.
Let your customers know up front what your late fee policies are. Use plain, simple language to avoid confusion, and provide additional language options when possible. Communicate proactively about upcoming due dates and how a person can avoid penalties. For instance, let someone know if they can pay a portion of their bill in order to avoid extra charges, both online where they find their bill and via automated email alert.
5. Make it easy for everyone to pay their bills on time.
Your customers will have different preferences and needs when it comes to paying their bills. Some people may want to pay everything from their smartphones, while other customers may need to pay their bills in person, especially those who pay in cash due to preference or need. Some who pay in cash are unbanked and might not have the option to pay by check or credit card. Provide multiple payment options for every debt to ensure you’re not placing undue burden on certain populations. For instance, mobile-responsive web payments will help people easily pay online, even if they don’t have access to a computer. Self-service payment kiosks provide a secure and convenient option for people to pay in person using cash, card, or check. Kiosks can provide 24/7 service so that your customers don’t need to take time off work or miss out on hourly wages.
Local governments and utilities are tasked with serving everyone in their community. This means providing essential services to all, and it also means keeping the needs of diverse communities in mind when collecting fines, fees, and other bills. When you reduce the barriers for people to pay, you can streamline vital revenue collection while also providing a better customer experience for the people you serve.