Credit control is the policies and practices used by institutions to ensure invoices, and non-invoiced debts, are paid in a timely manner while trying to minimise the risk of bad debt. The higher education sector's main challenge in this area is the significant amounts of staff time and effort spent chasing debt and (hopefully) maintaining low levels of bad debts.
The Uniqueness of the Higher Education Sector
University credit control teams have always faced a unique set of challenges, both in terms of the debtor demographic and the different funding models available, but also conflicting internal and external pressures around student wellbeing, offering flexibility and collecting genuine debt. During the pandemic some credit control teams have also been under pressure to pause or scale-back debt recovery processes in light of media coverage over service provision and student mental health. At the same time, managing payments proactively has become more important than ever and credit control teams now need to make a case for reinstating measures, if they haven’t already, or take the opportunity to review policies and practices in light of increased scrutiny.
Questions To Ask When Reviewing Your Credit Control Policies & Practices:
- Is enough being done to avoid debt becoming overdue in the first place? For example, to what extent are financial elements included as part of the enrolment/room booking process.
- Are there restrictions on the sanctions you are able to put in place for debtors? If so, greater emphasis needs to be placed on ‘front-loading’ the effort to mitigate the volumes of debtors falling into debt recovery processes. This would have a positive impact not only on the university cash flow, but also on the student experience as fewer students fall into debt.
- Are the current processes efficient and effective? For example, do you know which communications or interventions are having the greatest impact for your University and how is this measured and reviewed so that staff resources are directed in the most impactful way.
How Can WPM Support Your Institution?
WPM created a Credit Control Special Interest Group (SIG) in February 2019 and is made up of 21 university members. It was established with two key goals in mind:
To develop and agree sector specific best practice in credit control in order to:
Avoid debt becoming overdue (i.e. how can we avoid it becoming a “credit control” issue at all).
Best manage and recover debt when it does become overdue (i.e. how can we minimise the staff effort, and potential upset, to all parties).
To gather evidence to support best practice recommendations for the sector.
Through process mapping exercises, member surveys and group meetings we have begun to build a detailed picture of what best practice may look like to protect both the university and their student debtors from the ‘pre-debt’ stages, through enrolment or equivalent processes, to reminder communications and ultimately to the application of potential sanctions.
An improved payer experience through the use of clearer communications and processes resulting in a smaller risk that payments are late.
The use of university-controlled automated instalment methods resulting in fewer students receiving academic suspensions due to outstanding debt.
A significant, & ongoing, reduction in staff time and effort spent chasing payments by using a combination of automated communications and easy-to-access payment routes which use a “self-service first” approach to collecting outstanding debt.
By proactively managing the payment process, communicating expectations clearly and regularly, as well as managing non-payers, you can maximise income but also reduce costs and staff effort along the way.