The Collections And Recovery Best Practices Manual
from origination to write-off, the best practices your organization needs to improve collections and recovery The Collections & Recovery
Best Practices
Manual
The New
Normal
Crash, crisis and confusion. Non-performing loans (NPLs) are on the rise. New regulations constrain capital usage.
And the lingering effects of the credit crunch still squeeze balance sheets and bottom lines. Europe in particular is feeling the pain: there are an estimated €1 trillion NPLs on the books of European countries according to Ernst & Young, and other troubling factors across the continent, such as:
NPLs and general customer indebtedness rose 17% by the end of
2013 in southeastern Europe alone.
In Romania and Serbia, it rose to 22%; Croatia’s corporate sector saw NPLs rise 27%.
Greece’s financial market NPLs jumped to 31% in 2013.
The Collections & Recovery Best Practices Manual
2
The New
Normal
Other countries are suffering, too:
Analysts believe Turkey’s banks could suffer more in coming years than during the financial crisis, and loans to small and medium enterprises have been four times more likely to default than residential loans in the years following the crisis.
North Africa and areas of the Middle East saw higher percentages of NPLs from 2009 to 2013—with Tunisia and Egypt showing some of the highest volumes.
Payment challenges aren’t limited to retail banks, either:
National regulators are cutting telecom service charges, dropping revenue streams by more than 8%—as the industry moves to consolidate. The Collections & Recovery Best Practices Manual
3
The New
Normal
What do all these organizations have in common? They face increased risk, lower revenue and stricter regulations thanks to the credit obligations on their balance sheets. In the case of financial institutions,
Basel III regulations and an ongoing hunt across Europe by the European Central Bank for bad loans mean dire consequences due to NPLs. For telecoms and utilities, revenue is increasingly
Best Practices
Manual
The New
Normal
Crash, crisis and confusion. Non-performing loans (NPLs) are on the rise. New regulations constrain capital usage.
And the lingering effects of the credit crunch still squeeze balance sheets and bottom lines. Europe in particular is feeling the pain: there are an estimated €1 trillion NPLs on the books of European countries according to Ernst & Young, and other troubling factors across the continent, such as:
NPLs and general customer indebtedness rose 17% by the end of
2013 in southeastern Europe alone.
In Romania and Serbia, it rose to 22%; Croatia’s corporate sector saw NPLs rise 27%.
Greece’s financial market NPLs jumped to 31% in 2013.
The Collections & Recovery Best Practices Manual
2
The New
Normal
Other countries are suffering, too:
Analysts believe Turkey’s banks could suffer more in coming years than during the financial crisis, and loans to small and medium enterprises have been four times more likely to default than residential loans in the years following the crisis.
North Africa and areas of the Middle East saw higher percentages of NPLs from 2009 to 2013—with Tunisia and Egypt showing some of the highest volumes.
Payment challenges aren’t limited to retail banks, either:
National regulators are cutting telecom service charges, dropping revenue streams by more than 8%—as the industry moves to consolidate. The Collections & Recovery Best Practices Manual
3
The New
Normal
What do all these organizations have in common? They face increased risk, lower revenue and stricter regulations thanks to the credit obligations on their balance sheets. In the case of financial institutions,
Basel III regulations and an ongoing hunt across Europe by the European Central Bank for bad loans mean dire consequences due to NPLs. For telecoms and utilities, revenue is increasingly