Nearly half of all debts owed to businesses are as a result of forgotten or late payments, rather than more expected reasons such as customers not having the means to pay, research finds.
The UK’s spread of debt isn’t just restricted to income deprived households, but is in fact spread across some of the nation’s more affluent individuals, according to a study by Echo Managed Services.
Forgetting to pay is the biggest issue among those in higher income brackets, with almost half of people that have missed a payment in the £40,000+ salary bracket stating it was for this reason. This is compared to 28 per cent in the under £10,000 salary bracket and 37 per cent in the £10,000 to £19,999 bracket.
An additional three in five people earning over £40,000 annually have missed a payment to an everyday service provider at some point.
Echo Managed Services’ own collections data reveals that one in three people with debts over 60 days late are in more financially stable situations, with 13 per cent being some of the more wealthy and highly educated in society, classed as ‘affluent achievers’ or ‘rising prosperity’ in Acorn classifications.
The report cites the biggest reasons behind debt with everyday service providers as being forgetting to pay (41 per cent), monthly incomings less than outgoings (28 per cent), amount on bill incorrect, a mix up with the bill or didn’t understand the bill (26 per cent)
The bill being more than expected (16 per cent), redundancy/loss of job (12 per cent), ill health or incapacity leading to loss of earnings (7 per cent), and withheld payment for poor service (6 per cent) are other reasons given.
Monica Mackintosh, customer services director at Echo Managed Services says the UK’s mounting debt problem is an issue which can’t be ignored, with latest figures from The Money Charity putting total debt in the UK at the end of March 2016 at almost £1.5 trillion.
‘It’s therefore essential that, in order to resolve this, we begin to look more closely at the spread of, and reasons for debt, before the challenge gets even greater,’ she adds.
Early intervention and proactive multi-channel customer communication can be extremely effective in helping to mitigate avoidable debt, Mackintosh says.
‘For those customers with genuine affordability issues, offering a range of achievable payment options and signposting to impartial debt advice is crucial.’
Further reading on late payment
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