The impending wave of Financial Hardship cases are coming: How will your business respond post COVID

Pre-COVID19—if you can stretch the memory back that far! —about 1 in 1000 accounts referred to ARMA were hardship cases. That is, a customer admits their liability but is unable to pay their liability due to illness, unemployment, or other reasonable cause. As the coronavirus and financial contagion spread, that number went through the roof.

Just a couple of months later, something remarkable happened: the government stimulus money was distributed to individuals and we saw financial hardship cases dip BELOW pre-COVID levels. That’s right, fewer hardship cases since the Stimulus Packages. People were paying their bills.

Now, with stimulus packages winding back from the end of September, and economic recovery still a roadmap, not a reality, what can we reasonably expect of consumers with a liability? At ARMA, we are preparing for another surge in hardship cases—the second wave, so to speak. Any business with consumer accounts—think gas, electricity, insurance, telco—should now be planning their financial hardship response.

Below, our Head of Customer Wellbeing, offers a methodical approach to respond to customers in financial hardship. Remember: the aim here is to be flexible, facilitative, and compassionate so you can recover your money and retain your customer.

1. Accept hardship enquiries

Your business should actively encourage customers in financial hardship to contact you to discuss their individual circumstances. Early identification and early response often generate the best outcome for the business and the consumer. The banks have led the way here with COVID-19 hotlines, FAQs on their website, and online forms for customers to register hardship.

At ARMA, we have tried to make it as easy as possible for our clients’ customers to make an application for Financial Assistance. Our ARMAAssist financial hardship message is front and centre on our website; we have created a dedicated inbox and intelligent webforms for our employees to receive cases online; and there’s also a customer service hotline.

---> Action item: Decide the best channels your business will provide for customers to register financial hardship easily and in a non-intrusive manner.

2. Triage effectively

As you identify hardship candidates, profile them with the aim of first identifying if they qualify for your hardship response or if they are experiencing a temporary payment difficulty better addressed with a payment plan or budgeting plan.

At ARMA, we make an initial phone call to customers to understand their situation, offer help, and create a shared goal to resolve the situation as soon as possible.

---> Action item: Allocate profiling responsibility to the right person in your business with the listening and empathy skills needed to have an open and respectful conversation with your customer.

3. Collect evidence

It’s a good idea to have a hardship application form so your customers and you retain a written record of their request.

Your hardship application form curates supporting material. Here are a few things we consider at ARMA:

  • The amount earned, living expenses, assets, and liabilities.

  • Evidence that verifies the claim e.g. job termination letter

  • How paying the debt will affect the applicant’s ability to pay for basic needs such as food, and special needs such as medical bills.

For some customer bases, completing a form will be an added burden. If it’s too complex, you might only get 1 in 5 back.

You can consider limiting the need for a form but having a verbal conversation instead, followed up with your written assessment.

---> Action item: Decide how you will collect evidence of financial hardship. Make this process verbal or offer alternative self-service solutions.

4. Decide on a plan of action

Possible resolutions to your hardship customers will vary depending on individual circumstances.

Existing customers who are already repaying more than a minimum amount may have the option of temporarily reducing or deferring payments.

New customers may agree to a minimal arrangement or to place their account on hold for a period.

The developing nature of COVID-19 means that businesses should be prepared with flexible options that don’t put their customers under further unnecessary hardship.

In all cases, document the agreement and review date.

---> Action item: Consider a variety of reasonable repayment and account management options you can offer your financial hardship customers. Have strong internal systems and processes which allow you to recontact your customers once the hold period is over.

5. Reporting

Your business should have good visibility of all financial hardship customers. You can allocate a special ‘COVID code’ to your CRM database, and regularly review your revenue trends.

Update your management team weekly and analyse your own cash flow impact.

---> Action item: Create a weekly reporting and review process to monitor the scale COVID is having on your business and the possible long-term financial impacts.

Can ARMA help?

At ARMA we understand that debt recovery may not be your core business. But it is ours. Our ARMAAssist service is available to help your business undertake its financial hardship responsibilities efficiently. If you need advice, please contact Eddie Smith at or 0415 351 832 for an obligation-free consultation.

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