Debt recovery made simple

It’s a sad but very true reality that, when doing business, there will always come a time when customers or clients fail to pay their debts. Worryingly, the effects of this can be devastating for smaller organisations. UK business and finance resource BizHelp24 estimates, for example, that a company trading at 7.5 percent profit with an account overdue for 60 days will have around 50 percent of its ‘bottom line’ profit eroded as a result of the owing debt.

Until 2000, this harsh reality was even more severe and was having dire effects on UK entrepreneurialism. Smaller organisations, in particular, simply did not have the funds to go through costly reclaim processes if and when they were owed money. The ‘late payment of commercial debtors with interest’ legislation of 1998 (which came into effect in 2000), was designed to eradicate this problem and to enable smaller businesses to grow and remain competitive within Europe by putting an end to crippling debt. This legislation means that companies can now chase up debt on a more regular and systematic basis.

Yet, while this legislation makes it more financially viable for UK businesses to chase up debt, such activities are still extremely resource intensive. This is where debt recovery specialists fit in. A number of law firms across the country have practices dealing specifically in debt recovery, while a number of firms also focus solely on this area of the law.

One such organisation is Thomas Higgins & Co, the biggest specialised B2B solicitor debt collection company in the UK. The company’s leading position in debt recovery services requires ongoing competitive advantage, which it continuously seeks through improved productivity and efficiency, in addition to outstanding customer service.

Part of this is the ability to rapidly meet the changing demands of the sector – for example, quickly implementing new regulations or reflecting new areas of compliance. This was becoming increasingly time-consuming to achieve with Thomas Higgins’ previous database system. Therefore, following a comprehensive procurement process, the company selected InterSystems Caché post-relational database.

The debt recovery process
Debt recovery processes in the UK can be broken down into three clear stages – all of which Thomas Higgins manages for its clients.

1) Letters Before Claim (LBC) are issued to debtor organisations, advising of monies owed and requesting prompt payment. In the majority of cases (around 80-90 percent), an official letter is sufficient to rectify the situation. Thomas Higgins issues a huge amount of LBCs per month and, due to operational efficiency, can charge clients a fixed fee per letter.

2) As a second stage, organisations may process a Court Action against their debtors. In order to take such proceedings, the creditor requires sufficient evidence to make a claim. Thomas Higgins charges a flat fee to collate a case history and produce a claim using its Claim Production Centre (CPC), ensuring clients never end up with nasty surprises at the end of the process.

3) The third and most serious level is judgement and execution. County Court Judgements (CCJs) or High Court Executions can be issued via the Lord Chancellor’s County Court Bulk Centre (CCBC) the same day, once instructed by the client. Depending on the amount owed, either a County Court Bailiff or High Court enforcement officer will attend in order to retrieve the debt. Thomas Higgins liaises with these third parties to ensure a smooth, end-to-end transition throughout the process for its customers.

The process of claims management can be highly resource intensive, and Thomas Higgins continuously seeks to create efficiency though proficient internal administrative processes. Such savings and efficiency can then be reinvested to offer customers a responsive fixed rate service with ease and transparency of use, such as online client instruction. This is just one of the reasons that Thomas Higgins used InterSystems’ Caché post-relational database in 2000 to develop its online system.

Gaining and retaining competitive advantage
InterSystems’ Caché is now at the heart of Thomas Higgins’ operations. The firm is able to send its claims, judgements and executions directly to the Claim Production Centre (CPC) and the County Court Bulk issuing Centre (CCBC) by interfacing with the Court’s systems, allowing it to give clients the best possible service and least delay in debt collection. With the company’s previous database, this process used to take around 45 minutes, but with Caché has been reduced to under five minutes. This allows Thomas Higgins to extend its client cut-off times, enabling it to issue more proceedings on the same day.

Caché’s Rapid Application Development environment has enabled Thomas Higgins’ Debt Claim System to be fully revised and improved beyond the original scope of work, and within the same timescales. For example, the firm has been able to redesign its Graphical User Interface, implementing new changes such as additional functionality and usability extremely quickly. “Prior to implementation, we were behind in terms of where we wanted the system to be and how we wanted it to function,” admits Steve Tasker, Head of IT and Internet Services at Thomas Higgins.

Caché has also enabled the law firm to dramatically improve customer service through its web front-end and to introduce a unique online automated debt recovery process, allowing clients to initiate and track all actions themselves. Its speed, efficiency and accessibility deliver significant competitive advantage. Thomas Higgins’ online clients now receive automatic e-mail, SMS and fax updates as and when any changes or developments occur. The rich web user interface provides clients with full access to all their cases, whilst amendments are reflected automatically between the web and core Debt Claim systems – and vice versa, triggering relevant notifications.

Since the rollout of this service, Thomas Higgins has experienced a growth of around 150 users per month, indicating the real value that customers experience and leading Thomas Higgins to view it as a great success.

In 1994, Thomas Higgins introduced a company-wide document imaging system, which allows staff to view correspondence on case files at the touch of a button. This system used its own database but, with the introduction of Caché, it was integrated, allowing faster image retrieval, reduced hardware and faster backups. This was all possible because of Caché’s ability to manage large database files. Paperwork has more or less been eradicated, improving productivity and efficiency, whilst leaving Thomas Higgins safe in the knowledge that it remains compliant with industry regulations.

The performance and power of Caché was also fundamental in convincing Thomas Higgins to select the system during the procurement process. Internally, its old system encompassed around 80 percent of the debt recovery process. The new automated Debt Claim System, however, now manages 95 percent of the entire process, providing a clear productivity boost to the organisation.

Tasker added: “We looked at Oracle and Microsoft SQL when considering the systems upgrade, but both would have required 30 percent more storage space. In addition, in simulated environment testing, it soon became apparent that InterSystems Caché was performed much better. The choice was an easy one.”

One example of how Caché is making a real difference to Thomas Higgins’ competitive advantage lies with a change in the law to withdraw the monopoly that the Sheriff offices had. With four weeks to go before change-over and with even the newly appointed enforcement offices unaware of what the process of law was going to be, any firm of solicitors dealing with the transition from Sheriff officer to enforcement officer had a major hill to climb. With regards to court form changes, changes in different court processes and in how to deal with the enforcement officer, as well as any instructions received before the cutover date, had to be dealt with by the sheriff officer. Therefore, Thomas Higgins had to devise a way of automating this to run both systems side by side. Caché allowed Thomas Higgins to rapidly develop software to do this. The ease with which Caché could manipulate, insert and update data meant the firm could update the new values and make them available to all relevant elements of the system. “The competition’s database products took weeks and even months to carry out this process,” Tasker recalls.

This level of flexibility is not unique. Caché continues to give Thomas Higgins the ability to respond to market changes and customer demands, providing the most favourable pricing strategy, thus ensuring that it is always competitive.

From the IT team’s perspective alone, Caché has even provided some real benefits in terms of work/life balance. Caché’s compact size and massive scalability allows Thomas Higgins to replicate its database on a notebook, affording developers the flexibility to work offline, to send e-mail updates on progress or remotely implement changes, meaning they are not tied to the office.

“We are delighted that Thomas Higgins has chosen InterSystems as its primary technology partner,” commented Tim Sheppard, account manager at InterSystems. “Placing Caché at the heart of their operations has enabled them to meet and respond quickly to both customers and the marketplace. The features that Caché technology has to offer will continue to benefit Thomas Higgins in many areas, creating greater value to further increase its competitive advantage.”

Looking ahead
Caché has dramatically exceeded Thomas Higgins’ expectations since it was implemented: it has enabled the firm to improve its Debt Claim System, boost customer service, increase productivity and efficiency, and respond to market changes and customer demands more effectively.

“The implementation and rollout of Caché has had a significantly positive effect on our organisation,” concludes Tasker. “We are so impressed with the speed, scalability and ease of use of the database system that we now develop all our new applications and integrate new processes into Caché.”