Through our debt maturity assessment, combined with a broader focus on billing and customer contact activity, we identified routes to achieve a ~£50m BDC reduction for an energy retailer.
This informed a targeted improvement programme to address capital adequacy challenges, driven by rising debt and BDC.
Client Challenge
An energy retailer faced pressure from increasing debt and rising BDC levels, creating significant capital adequacy concerns. Immediate in-year improvements in BDC were needed, while maintaining strong customer service and operational productivity.
Key challenges included:
- Underutilisation of debt segmentation and treatment processes, with customers not being accelerated through to the correct journey
- A lack of proactive management for potential debt exposure, limiting the ability to plan and mitigate risks
- Balancing support provision for customers vs. driving increased debt for them to pay back
- Billing issues including unidentified and unquantified pots of ‘erroneous’ debt
- Inconsistent data governance and reporting, driving confusion and regulatory risk
Our Approach
BFY conducted a five-week diagnostic that, as part of reviewing our client’s billing, metering, and contact centre capabilities, also included a debt maturity assessment framework, evaluating 157 capabilities across the debt function.
Key findings and proposed solutions included:
- Identifying provisioning improvement opportunities to reduce BDC by £10m+
- Designing targeted customer campaigns to uplift debt collection by £13m
- Completing a debt sale on relevant accounts
- Upstream contact centre improvements to reduce downstream debt impacts
- Uncovering a critical data gap in reporting systems, with the opportunity to recover £15m in erroneous debt when addressed
- Identifying missing KPIs, reporting gaps, and process inefficiencies across billing, collections, and metering
Outcome
Overall, our assessment identified a potential ~£50m BDC reduction benefit, leading to the design of a six-month transformation programme to implement the necessary improvements.
BFY’s debt and transformation specialists continue to work closely with the retailer, to execute and realise these benefits.
If you’d like to explore debt improvement opportunities for your organisation, contact Kevin Scott.
