Current economic pressures and a lack of job opportunities are causing increasing financial strain on many households across the nation. As the cost of living continues to rise, many individuals are finding it difficult to meet their financial obligations. High levels of unemployment and competitive job markets are further affecting individuals by placing financial pressure on multiple generations who are struggling to find secure employment. This is not only a cause for concern for consumers but businesses too. Individuals do not have the funds to pay their accounts, and businesses are taking a significant impact with regard to failed debit order collection. Thankfully, with Strike Date Optimisation (SDO), businesses now have access to their personal crystal ball and can protect themselves against failed collections by accurately identifying when clients will have funds in their accounts.

What is SDO?

When you think about a crystal ball, you expect to be given information about the future. Well, SDO does exactly that! It offers businesses insight into the future by determining the best dates to debit their clients. This software uses advanced data analysis to predict when clients will have the necessary funds available in their accounts for successful payment collection, based on their historical account activity. This information can then be used by businesses to make informed decisions about their actions for future collections. SDO is a sophisticated solution, not only improving collection success rates but also allowing businesses to avoid unnecessary expenses and accelerate internal workflows. Businesses using this software can take advantage of both individual and batch format analyses for real-time debit solutions. This once-off process is best used in two instances: (1) when a client who previously paid well suddenly begins to default on payments and (2) at the time of onboarding, ensuring that they know exactly when to debit client accounts from the very beginning of their relationship – a necessity when dealing with clients in the current economic climate.

How the economy is affecting your collections

It is not uncommon for clients to experience cash flow problems from time to time but in recent years cash flow has become a standard issue, with many people struggling to make it through the month due to a lack of funds. In an article by IOL, they state that in recent reports by FNB, the average middle-income consumer can spend 80% of their salary within 5 days, with a large portion of that expenditure going toward debit orders. Escalating expenses in all aspects of life have been the reason for an increase in the percentage of civil judgments recorded for debt. While the cost of living is increasing, so too is the unemployment rate. BusinessTech laid it all out in an article, referencing the 6% decrease in hiring activity in the final months of 2022 with expectations of further drops in this percentage over the years to come. In fact, the employment growth rate is predicted to sit at .3% less than the labour force growth rate in the upcoming decade. With these points in mind, it comes as no surprise that many South Africans are struggling to meet their monthly financial obligations. Thus increasing the failed debit order collections that businesses are faced with, putting strain on business margins. This is why it is absolutely vital for businesses to implement the appropriate measures for financial risk management.

Financial risk management with SDO

Debit order optimisation services provide several benefits to businesses. Software like SDO offers a convenient and reliable way to receive regular payments from customers while greatly reducing the risk of failed collections. The software takes into account factors such as the client’s income, payment history, bank balances, and upcoming payments, and identifies the three best debit dates for each client. These are the dates the client is most likely to have funds available. This allows businesses to set up their debit orders according to the specific dates offered by the software. So, instead of offering the regular debit dates of the 1st, 15th, and 30th, businesses can debit bank accounts confidently by receiving accurate and reliable data regarding ideal times to debit accounts. This will assist businesses by improving their cash flow management as well as reducing the administrative load affiliated with chasing clients for overdue payments.

Are you debiting clients confidently?