Why Activity Is Often Mistaken for Progress in Debt Collection

🎬 Series Introduction

Over the coming weeks, we are examining the most common failures in debt collection—and more importantly, what they are really costing businesses

It Looks Like Something Is Happening

Most businesses don’t question their debt collection provider.

Because on the surface, everything appears active:

• Letters are being sent
• Calls are being made
• Updates are being provided

There is movement.
There is communication.
There is activity.

The Problem: Activity Is Not the Same as Progress

This is one of the most common issues we see.

Cases appear to be moving forward—but in reality:

Nothing meaningful is actually changing

What “Activity” Looks Like

In many cases, this includes:

• Repeated follow-up emails
• Standardised phone calls
• Generic updates
• Routine escalation

All of which create the impression that the case is being handled.

What’s Missing

What’s often missing is:

Ownership

No one is:

• Making a clear decision on the next step
• Taking responsibility for the outcome
• Adjusting strategy based on what is actually happening

Where It Breaks Down

When a case becomes more complex:

• The debtor stops engaging
• A dispute is raised
• Liability becomes unclear
• Payment promises are broken

At this point, recovery requires:

• Investigation
• Legal awareness
• Commercial judgement

Not more activity.

What This Looks Like in Practice

We recently reviewed two separate matters that had been with another provider for several months.

In the first, the issue was not recovery—it was liability.

The correct party had not been identified, and no investigative steps had been taken to establish who was actually responsible for the debt.

As a result, the case remained active—but made no progress.

In the second, the debt was being pursued through a standard process, with repeated contact but no change in approach.

No consideration had been given to applying legal pressure or escalating strategically to prompt engagement.

Again, there was activity—but no direction.

In both cases, the problem was not effort.

It was:

A lack of ownership and commercial judgement

The Hidden Consequence

One of the most common patterns we see is a focus on controlling cost at each stage of the recovery process.

On the surface, this appears commercially sensible.

But over time, it leads to a different outcome:

• Debts remain unresolved
• Write-offs increase
• Recovery becomes less effective year on year

More importantly, it shapes behaviour.

Inconsistent recovery doesn’t just delay payment—it signals to the wrong customers that you’re an easy target.

Not intentionally—but commercially, that is exactly what happens.

Customers who are inclined not to pay learn that:

• There is little consequence for delay
• Pressure is inconsistent
• And recovery action lacks follow-through

A Different Outcome

We have worked with clients who recognised this issue early and took a different approach.

In one case, a multi-branch electrical wholesaler operating within the construction supply chain moved away from a fragmented, process-driven model to a more structured and accountable approach.

Over time, the results were clear:

• Greater control over recovery
• Consistent escalation where required
• Reduced reliance on reactive action
• And a measurable reduction in bad debt

Today, their exposure to bad debt has been kept at a fraction of 1% of turnover, having reduced consistently year on year.

For a business operating in a higher-risk environment such as construction supply, this represents a well-controlled position. In many cases within this sector, bad debt can exceed 2%–5% of turnover where recovery lacks consistency.

Over time, a clear message was sent to the market—particularly among poor payers: they were no longer a soft touch.

A Simple Question Worth Asking

If you are currently using a debt collection provider, ask yourself:

Who is actually responsible for the outcome of your case?

Is there:

• A clear strategy?
• A defined next step?
• A decision-maker driving the process?

Or is it simply:

Ongoing activity without direction?

What Should Happen Instead

Effective debt recovery requires:

• Clear ownership
• Commercial decision-making
• A defined strategy based on the specific case

It is not enough to:

• Follow a process
• Or maintain activity

It requires:

Someone taking responsibility for the result

🎬 Next Episode

In Episode 4, we examine another hidden failure in debt collection:

Why process-driven escalation weakens debt recovery

📞 Call to Action

If your cases appear to be moving but not progressing, it may be worth reviewing how they are being handled.

Call Carlo Pegna today on 01920 481467 for:

• A free debt recovery assessment
• A clear view on whether your current cases are being progressed effectively
• Practical advice on what should be happening next

If we can improve your recovery rates or reduce delays, we will tell you.

If we can’t, we will tell you that as well.

Call now on 01920 481467 and take control of your debt recovery.