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Collection of Debtby Public Service Bodies

Best Practice Guide

Annex 1:Sample Policies & Procedures

Collection of Debt –Best Practice Guide (Annex 1)

These guidelines were prepared as part of the Debt Management Implementation Project which was coordinated by the Department of Public Expenditure and Reform (DPER) – its Final Report is available on the DPER website under “2016 Reports”.

The project sought to implement government policy based upon the BearingPoint Debt Management Review published by the Minister in July 2014 which sought to implement the measures recommended.

This document has been prepared to provide Irish public service bodies (PSB) with guidelines for preparing policies and procedures for debt management. Of its nature, it is not exhaustive nor prescriptive but rather provides guidelines that will need to be adapted to the requirements of each PSB and to the debt being managed.

To do so best, PSBs should undertake appropriate debt management training and involve debt management experience/expertise to prepare the policies and procedures and to plan and guide their implementation. Guidance is also provided in the Debt Management Best Practice Guide.

Feedback and requests for access to this document should be sent to: [email protected]

About this Guide

This Guide provides guidance for the application of best practice in debt management by public service bodies to help improve their efficiency and effectiveness in the collection of monies due while applying the high standards of public service.

It is recognised that the Guide will apply differently in various public bodies depending on their size, the debts being collected, their client base and their resources. It is the responsibility of each public body to determine how best to use the Guide.

The provisions of this Guide do not override existing statutory requirements and other obligations and each public body should ensure that whatever measures are adopted are fully compliant in this regard.

Collection of Debt – Best Practice Guide (Annex 1)Table of Contents - i

Table of Contents

Overview........................................................................................................................................1

1 The Debt Management Policy.........................................................................................12 The Debt Management Procedures................................................................................2

Part A: Debt Management Policy...................................................................................................3

1 Mission Statement..........................................................................................................3

2 Debt Management Goals................................................................................................33 Debt Management Organisational Structure..................................................................4

4 Collection Staff and Training...........................................................................................55 Data Management & Protection.....................................................................................6

6 Technology.....................................................................................................................67 New Clients.....................................................................................................................7

8 Issuing Bills /Invoices / Demand Notices.........................................................................89 Sanctions........................................................................................................................9

10 Legal & Enforcement......................................................................................................911 Bad Debts & Write-Offs................................................................................................10

12 Payment Options..........................................................................................................1013 Collection Plans.............................................................................................................11

14 Disputes and Queries....................................................................................................1115 Vulnerable Debtors.......................................................................................................12

16 Reporting & Analyses....................................................................................................1317 Process Improvement...................................................................................................13

Part B: Debt Management Department Procedures.....................................................................14

1 Account Setup...............................................................................................................14

2 Account Maintenance...................................................................................................143 Credit Checking.............................................................................................................14

4 Creating a Bill / Invoice / Demand Notice.....................................................................155 Issuing a Statement......................................................................................................15

6 Issuing a Credit Note.....................................................................................................167 Receipting Payments Received.....................................................................................16

8 Dealing with Debtor Overpayments.............................................................................169 Sending a letter.............................................................................................................17

10 Sending an Email...........................................................................................................1711 Sending a Text..............................................................................................................18

12 Processing a Prescribed Financial Statement................................................................1813 Methods of Payment....................................................................................................18

14 Collections....................................................................................................................19

Collection of Debt –Best Practice Guide (Annex 1)Table of Contents - ii

14.1 Early Stage Debt Collection..............................................................................1914.2 Past Due Date Debt Collection.........................................................................1914.3 Late Stage Debt Collection...............................................................................19

15 Payment Plans..............................................................................................................2016 Dispute Management (Dealing with disputed bills)......................................................21

17 Dealing with Partial Payments......................................................................................2118 Dealing with Inability to Pay / Hardship Cases..............................................................21

19 Dealing with Refusal to Pay..........................................................................................2220 Sanctions......................................................................................................................22

20.1 Place Account on Stop.....................................................................................2220.2 Netting Internal................................................................................................2220.3 Netting External...............................................................................................23

21 Enforcement.................................................................................................................2321.1 Sending Account to Debt Collector..................................................................2321.2 Sending Account to Legal Services...................................................................23

22 Attachment to Earnings................................................................................................2423 Account Write-off (& Recoveries).................................................................................24

24 Vulnerable Debtors.......................................................................................................2525 Abusive Debtors............................................................................................................26

26 Missing Debtor..............................................................................................................2627 Allocating Payments.....................................................................................................27

28 Deduction Management...............................................................................................2729 Codes & Record Keeping...............................................................................................27

29.1 Account Coding................................................................................................2729.2 Reason Codes...................................................................................................2829.3 Dispute Codes..................................................................................................2829.4 Account Note Writing......................................................................................29

Collection of Debt – Best Practice Guide (Annex 1)Page 1

Overview

The Debt Management (DM) Policy and Procedures documents provided here are guides to how you should adapt these documents for your organisation. It aims to provide a structure that will help public service bodies (PSB) construct a set of ‘best practice’ documents for their organisation. You may find that your organisation’s specific circumstances require a variation on the content provided but in the end the documents should follow a similar structure.

If you are having any difficulty in construction your own documents, you should seek help as these two documents are the core to how your debt management function is organised and operates.

The first important point is that there should be two distinct documents as they have very different purposes and roles:

The Debt Management Policy: This is a set of guidelines or principles according to which your organisation chooses to operate and which set out how you interact with your debtors.

The Debt Management Procedures: This is a collection of process documents which forms an instructional manual that sets out exactly how you do each and every step involved in the day to day running of the credit function of your business.

In short, your Debt Management Policy provides you with general rules while the Debt Management Procedures provide the specific instructions as to how the policies are implemented.

1 The Debt Management PolicyA written debt management policy is a must for any organisation that deals with customers who will at some time in the relationship owe it money. It is a key company management guideline document that should be prepared by all the management of the organisation in partnership with the front-line staff and with the expert help where necessary. This should involve getting buy-in to the document from every level within the organisation involved in debt management to the point that it is signed off at the most senior level available in your organisation. It should incorporate the organisation’s goals and the criteria for achieving those goals as they relate to the debt management function but leave the implementation of specific processes to the management of the debt management function.

When constructing your Debt Management Policy, you must make sure that it is a ‘live’ document. By this we mean that it is referred to regularly and used as a tool for improvement in your department. This document affects how you will deal with the debtors of your organisation so is important to the organisation as a whole rather than just the debt management function.

The three basic types of debt management policy are: restrictive, moderate and liberal. Each of these includes different goals, philosophies and financial needs. It is normal for an organisation to build a policy that takes points from more than one of the three types. The test of your debt management policy is whether it does a good job for your organisation.


Restrictive Debt Management Policy The organisation will not be open to taking risks preferring to only deal with debtors

who have reliable payment histories. This may be a very conservative policy but it is likely to result in an organisation that is on a solid financial footing.

While this policy is intended to protect the organisation, it risks restricting the number and type of debtors that you can deal with.

Where the organisation has no power over who it deals with, this policy would involve a very quick escalation path for slow payers.

Moderate Debt Management Policy This approach mixes good accounts with average accounts and accepts that some will

be slow in paying. With the acceptance of the higher level of risk comes additional pressure on the

collections team to keep the organisation in a strong financial position. The benefit of this policy is that it will allow some flexibility in the debtors that the

organisation deals with but still exercises control over the relationship. Liberal Debt Management Policy

Any organisation that has a liberal credit policy is taking a risk. They are likely to be exposed to high growth which requires funding but at the same

time they suffer sporadic cash-flow and under-capitalisation. These organisations frequently face having to handle a combination of major losses and slow -turning receivables.

There are exceptions but this policy is normally only suitable to an organisation with an almost monopoly position where the debtors have to deal with them.

2 The Debt Management ProceduresGood debt management procedures provide you with a step-by -step process for dealing with every eventuality you may encounter as part of running the debt management function of the organisation. They reduce the risk of costly mistakes and omissions caused by a lack of routine and an unstructured approach to decision-making and execution.

The document we have provided sets out the best practice in structuring your debt management procedures so that they will work for you. Be aware that every organisation’s debt management procedures will be unique to their circumstances so yours may use different headings or content than we have described but the structure should still be similar. If you are having any problems please seek help rather than risk causing future problems.

Note:

The Debt Management Policy & Procedures documents plus standard template letters and debt management plans should be referred to your Legal Department

or your legal adviser for review before going into operational use.


Part A: Debt Management Policy

1 Mission StatementThis section sets out the mission for the Debt Management Department.

The Debt Management Department’s mission is to facilitate the overall organisations aim of maximising the collection of all monies due to (Organisation’s Name) while treating all our customers/debtors in a fair and efficient manner.

Guidance:

The Debt Management Department’s mission statement should fully align with the mission statement of the organisation as a whole while also setting the tone for how the department approaches its task.

The mission statement should be written with careful consideration of the organisation’s goals. It is a description of how the Debt Management Department relates to supporting the mission of the organisation.

It should be created with input from senior management and other departments within the organisation as it is important that everyone understands the importance of the debt management function within the organisation.

2 Debt Management GoalsThis section sets out in clear terms of the specific objectives of the Debt Management Department.

After creating a mission statement specific goals must be set so that the mission can be supported and achieved.

Guidance:

Goals should be measurable so that the department and organisation must be able to tell whether or not the goals are being achieved.

Goals must be specific and set out the outcome / results that your Debt Management Department wants to achieve.

The goals must be achievable and realistic (e.g. everybody would aspire to 0% bad debt but that is not be realistic).

Remember that the structure and operation of the Debt Management Department as a whole will be tailored to achieving these goals so they are important.

Example set of goals:

The Debt Management Department will target achievement of the following goals to help the department and the organisation to achieve its mission:

Less than X% of accounts Past Due Less than X% of amounts billed are written-off annually Cost of Collection below x% of amounts billed


Average number of calls per day per collector : X All payments allocated correctly and in full within X hours of receipt Less than X% of accounts in dispute Average number of days to clear disputes less than: X days.

3 Debt Management Organisational StructureThis section describes how the Debt Management Department is organised and its reporting lines.

The Debt Management Departments structure must be defined clearly. This includes both the lines of authority and the duties and responsibilities of each individual in the department.

Guidance:

The level of detail required relates directly to the size of the department. With a large department it is vital to avoid confusion and to facilitate the smooth running of the department while also aiding the decision making process. For smaller departments less detail is required but it is still important for clarity and reduces issues in cases where the department expands over time.

The organisational structure should be clear and easily understood. Where necessary a graphic may help to lay out the lines of authority, e.g.

The duties and responsibilities of each individual should also be documented clearly, e.g.

Collector:

The collector is responsible for the day-to- day management of the customer accounts allocated to them. The collector reports to their Team Leader.

The role includes the following duties:• Corresponding with customers• Phone calls and meetings with customers• Etc.

The collector will also complete additional duties as required and allocated to them by their Team Leader to aid the operation of the department.

The collector does not have authority to issue credit notes or agree payment plans. A request for an action of this type needs to be documented on the debt management system and referred to the Team Leader for approval.

Collections Manager

Team Leader

Collector Collector

Team Leader

Collector Collector


4 Collection Staff and TrainingThis section describes the policy on training staff for their role in debt management.

The Debt Management Department recognises that its personnel are an important resource in achieving its goals. It recognises the importance of retaining skilled, motivated employees and of maintaining appropriate employee numbers for the level of activity involved.

The Debt Management Department is committed to the training and development of its staff so that they will gain the necessary skills and knowledge to undertake their role and responsibilities in the Debt Management Department.

The training provided will be for the three roles: Collector, Team Leader and Debt Management Manager. Each will have specific requirements but all will require training on a minimum of:

Understanding your collections’ policies and procedures Understanding collection paths The systems and technology in use Data management and maintenance (including data protection aspects) Communications skills: letter/email writing; client meetings Phone techniques and skills Negotiation skills Decision-making (in the interpreting policies and guidelines) Issue handling Key principles in dealing with special cases (e.g. vulnerable people, hardship cases)) Dealing with abusive clients Identifying and dealing with special cases (hardship cases, vulnerable debtors) Time management and prioritisation.

The roles of Team Leader and DM Manager will need additional training which may be in the form of mentoring over a period of time and which will include subjects specific to their duties.

The training will be broken into two sections:

Process Training: This covers training specific to the organisation and informs the collector how to use the any technology employed by the Debt Management Department and each process used in the handling of every eventuality that might occur.

Collections training: This is broader training that equips the individual with the professional skills and techniques required in collections work and provides them with the knowledge to become a more valuable asset to the Debt Management Department.

The requirement for training will arise in the following specific circumstances:

When a new employee joins the Debt Management Department. When a person is taking up a new role. When a new type of debt is being taken by the Debt Management Department. When a new or updated debt management system is being implemented. When relevant legislation or regulation changes (e.g. data protection, consumer rights) When a need for training is evident from an employee’s performance.


Where training is mandatory due to a legal or regulatory requirement, including Continuing Professional Development (CPD).

For the personal development of the employee.

Guidance:

Remember the importance of having employees with the right skills in the right positions. Without properly-trained and motivated employees in place, it will be difficult for the Debt Management Department to achieve its goals and the policy should recognise this.

When constructing this policy include input from the departments of human resources, training and finance.

Using accredited training courses will ensure quality and can provide formal qualifications which will be of value to the employee and attest to the professionalism of the organisation.

Training courses are run by IPA, some professional bodies (e.g. IICM, CICM) and some commercial training firms.

5 Data Management & ProtectionThis section describes how data will be managed, kept up-to-date and accurate and compliant with data protection legislation.

Accurate and up-to-date data on clients is an essential component of successful debt collection. Contact details are particularly important and must be recorded accurately and any changes noted (with due verification).

When a new account is opened, the correct name for account (e.g. registered name of a business) and address should be captured using a New Account Opening Form. All data provided must be corroborated in some way (e.g. CRO, utility bill, photo id)

Data must be kept up to date. It should be verified with the client in phone calls, meetings or field trips and reminders contained in any correspondence. Any undeliverable post should be followed up immediately.

Data protection legislation must be followed precisely and responsibilities assigned. This covers all records – not just computerised records. Policies are needed about: who can access what data, how data is verified and how long data is retained after an account is closed.

Guidance:

Staff must be trained and regularly reminded of their responsibilities regarding data. The Data Controller for your organisation must be involved in drafting data policies. Guidance on polices regarding data protection is available from the Office of the Data

Protection Commissioner (www.dataprotection.ie).

6 TechnologyThis section describes how technology is to be used and how further automation should initiated and implemented.

Technologies employed within the Debt Management Department are tools to support the collection of debts and should improve the efficiency and effectiveness of the department.


The Debt Management Department should be looking to employ technology to automate routine and repetitive operations like sending standard reminder letters and emails, sending invoices and statements, managing the collector’s workflows, gathering data for reports and controlling standards. The focus is to use the technology to free up the collectors’ and managers’ time to focus on higher value activities.

The debt management system is a key tool in the management of the Debt Management Department and it should be maintained and improved within an agreed project schedule.

It is vital that the integrity and security of the system and the data it holds are maintained at all times. Data protection considerations should also be considered in all aspects of the system’s deployment and use.

To make the best use of the debt management software it is important that collections and management staff who will be using it have detailed initial training followed by regular updates where any changes are made and to keep their skills fresh.

The evaluation of new technology or improvement to current technology employed should be evaluated on the basis of budget and potential improvement to both efficiency and effectiveness.

Guidance:

The Debt Management Department’s policy with relation to the use of technology should align with the general policy of the organisation as a whole.

It should be designed and implemented with input from the ICT department to make sure that it is practical and achievable.

It should fit within the departmental budget to keep the collection function efficient.

7 New ClientsThis section details how new accounts or clients are processed.

In many cases, public bodies do not have discretion as to whether they can take on a new client or not. Nonetheless, it is important that all necessary data is captured quickly and accurately.

In all cases, the customer should be asked to provide all relevant data on a prescribed form with appropriate evidential material that helps verify the information provided.

Independent verification should be undertaken for all corporate entities (e.g. through the CRO) or for individuals where there is any doubt about the accuracy of the data provided.

Guidance:

Where possible, credit checks should be carried out and any prior history with the client reviewed; and, if applicable, they might be assigned to a specific collection path if there is a prior history of collection problems.

Any related accounts (e.g. for a single business or group of companies) should be noted and tracked.

Where a debtor is also a supplier to or receives other forms of payments from your organisation, this should be noted in case debts can be offset against payments due.


8 Issuing Bills /Invoices / Demand NoticesThis section details how invoices/bills/demands are to be issued.

The Bill, Invoice or Demand Notice is the document sent to the customer/debtor that describes what they are being billed for, the amount that is due for payment and when payment is due.

Note: Where a schedule of payments is due (e.g. loan repayments, rents, instalment plan) but the principles outlined below still apply to issuing the initial notification of the payments due.

The type of document sent will depend on the nature of the debt but the following points apply:

The invoice should be sent as soon as possible after the debt has been originated. The invoice should be accurate especially as regards: name, address, description of the debt

due or the service provided, amount due and date due. The invoice should include the information about the options that the debtor has for making

payment. Invoices should contain: An invoice number. An invoice date. A customer number or other identifying code. Accurate name and address of the debtor (including Eircode if possible) A complete / clear description of the product or service supplied their quantity and

cost. The customer's purchase order or other reference information that is required A breakdown of taxes or additional charges. The total amount due clearly indicated. Payment terms and due date. Payment method options (if applicable). Relevant terms and conditions, including sanctions that might apply in the event of

non-payment.

Guidance:

The speed and accuracy of the creation of the invoice/bill is very important. It has been shown that if a customer receives a bill/demand quickly (i.e. on its due date or within days thereof) and it is accurate, they are more likely to pay quickly.

Where billing time-related targets are set, they should be based on an understanding of the Debt Management Department’s capacity and the service levels provided by the ICT department.

The content of the invoice/bill (and supporting documentation, if applicable) may vary depending on the customers being serviced but once a content set has been agreed, make sure that this is included in the templates used and that no document is sent to a customer without all of the requisite information being present.

In some cases, customers’ will have internal processing cycles which might try to align with to ensure timely processing of your invoices/bills.


9 SanctionsThis section describes the sanctions available and how they are to be invoked and executed.

The Debt Management Department reserves the right to apply sanctions against debtors who have not paid or made satisfactory arrangements to pay. Sanctions will only be applied when other collection efforts have failed and where they are cost effective and or concur with the department’s mission statement and goals. Sanctions that can be applied are detailed below:

Cessation of service Internal netting against future payments Cross organisational netting against future payments Charging of interest and penalties Legal action.

The Debt Management Department may add additional sanctions where it is deemed necessary based on the circumstances of a specific debtors case.

Guidance:

The selection of sanctions to be used should be done with input from other relevant departments including finance and legal.

Sanctions should be proportionate to the debt and the debtor circumstances. Sanctions should be practical and relevant to debtors and the organisation. In most cases, the objective of alerting the debtor to a prospective sanction is to get them to

pay or at least, enter into meaningful discussion about making payment – rather than necessarily invoking the sanction.

Imposing a sanction is just a step in the collection process and not an end point, so the sanctions chosen and the order in which they are used should reflect this.

10 Legal & EnforcementThis section sets the policy on taking enforcement or legal action including authorisation processes.

Debts should be referred to the legal department when all other avenues have been exhausted and the DM Manager agrees to the referral. Cases should also be referred if there are concerns about the legal status of actions being considered or disputes involving contractual terms.

Debtor accounts that have reached the point of needing legal enforcement should be referred promptly and with a full debtor details, debt history and debtor correspondence/communication included.

There is no lower or upper limit on debts that can be referred to the legal department. Disputes received by the Debt Management Department which is judged by the DM

Manager to have potential legal consequences should be referred to the legal department. If the legal department agrees that legal action can be taken on a debt, full legal and

associated costs should be included in the claim.

Guidance:

This section will be constructed in consultation with the legal department.


It is important to note in the policy that the legal department is a key support in the debt management process.

It is important to recognise that the legal department has an important part to play in the debt management process and should be integrated in to the procedures.

11 Bad Debts & Write-OffsThis section sets the policy on deeming amounts uncollectable, providing for bad debts and for write-off in the financial accounts.

Policies must be set down for making provisions against overdue amounts or where there is a doubt about its collectability. A general provision should be made for all overdue accounts based on their ageing; larger accounts and other circumstances (e.g. bankruptcy/insolvency, uncontactable, liquidation, etc) need to be reviewed individually.

The write-off of debt requires an objective judgement to be made of the possibility of collection in the future, the cost already incurred, future expected costs and the sanctions left available.

Debt write-off decisions will be made by the Debt Management Department manager for debts of less than €X. For larger amounts, the decision will be made at a senior management or Board level and may need to be referred to the Department of Public Expenditure and Reform or other external bodies.

A debt should only be written-off when any and all options for collection have been exhausted. A reason for write-off should be coded and recorded in the debt management system for analysis purposes.

Records should be kept of all written off debt as it does not mean they cannot be collected at some future debt if circumstances change. As a general rule, the debtor should not be informed when a debt has been written off.

A write-off does not necessarily mean collection activity stops; efforts should continue through suitable means (e.g. use of legal enforcement and/or debt collections firms).

Guidance:

The write off policy should include input from finance, legal and the Debt Management Department Manager. The basis for the write-off should be concise and clear.

The authority required to write off a debt should be noted and if there are different types or levels of debt these should be recognised

Further guidance is provided about making bad debt provisions and writing-off debts is contained in the Debt Management Best Practice Guide (Appendix C).

12 Payment OptionsThis section sets the policy on facilitating payment by debtors and reviewing the options regularly.

The Debt Management Department accepts payment from clients in the form of:

Cheques Bank Transfer Credit/Debit card over the phone Credit/Debit car through the payments portal


Billpost.

Payment in cash is not accepted for security reasons.

Guidance:

The policy should specify the payment options offered and those which are not accepted. The payment options offered should provide for those commonly used by the organisation’s

customers and those that are cost-effective for processing, allocating and recording. As many payment options as are feasible should be offered to make it easy / convenient for

the debtor to pay quickly.

13 Collection PlansThis section sets the policies and the principles behind the approach used.

A core function of the Debt Management Department is the collection of outstanding debts due to the organisation. This can only be achieved by having diligent and consistent collection procedures in place.

Collection plans will meet the following standards:

Where possible, the first contact should be prior to the due date, reminding the debtor of the due date and any consequences of late payment (e.g. additional charges).

The debtor should be contacted by email, letter, phone or text depending on which is best suited to the circumstances.

A series of planned follow-up contacts by letter, phone, etc. No more than 10 days should elapse between contacts with the debtor.

Agreements or actions discussed during a phone call shall be documented and confirmed to the debtor in writing or by email.

As much of the collections process as is practical should be automated.

Guidance:

It is important that a set of basic rules are set from which the Debt Management Department managers can construct collection plans. The importance of this part of the Debt Management Departments role should be emphasised.

The points of speed and consistency of contact are vital to collections and should be in the policy.

This part of the policy should be created with input from stakeholders including customer-facing departments who may provide valuable input about customers.

The focus on automation is important in the policy as it guides the practice in the department and automation improves efficiency and effectiveness.

14 Disputes and QueriesThis section sets the policy on handling disputed bills and other issues arising concerning debts. Escalation procedures should also set out clearly.

The Debt Management Department recognises that customers will at times raise disputes, issues or queries relating the goods or services provided and or the level of debt being sought. Such


communications from debtors shall be recorded on the debt management system, treated with due respect and dealt with diligently.

Disputes, issue or query should be resolved as quickly as possible. Delays can make resolution more difficult.

Guidance:

The vital point in dealing with disputes or issues is that they are handled professionally and quickly and the policy should reflect these two objectives.

As with any communication with a debtor, it is vital that everything is documented in full. This is particularly important with disputes so that there is a clear record of what transpired, commitments made and any offers made by either party, in case the matter has to be escalated to a dispute or legal process.

15 Vulnerable DebtorsThis section sets the policy on dealing with hardship or other vulnerable debtors.

The Debt Management Department recognises that some debtors may be considered to be more vulnerable and may require additional support and consideration in dealing with the debt. Vulnerability does not mean that the debtor not be required to pay amounts they are legally due. Where a person is recognised to be vulnerable, consideration should be given to:

Allowing a longer period to pay. Postponing enforcement action. Referring the person to sources of advice and support. Providing information in an appropriate format. A temporary payment arrangement with lower repayment than would normally be

agreed.The cause of vulnerability may be temporary or may be permanent in nature and the degree of vulnerability will vary widely.

A policy needs to be prepared on dealing with hardship cases or clients claiming an inability to pay. Guidelines need to be set on assessing clients’ ability to pay with the means that they have.

Guidance:

This section of the policy should recognise the social contract between the organisation as a whole and the debtor it is dealing with.

While flexibility should be allowed in these cases, there should be recognition that the debt is still due.

At all times the debtor’s right to privacy should be recognised. Classing a debtor as vulnerable is a subjective activity but guidelines should be included to

help in the decision. Further guidance on dealing with vulnerable debtors is provided in the Debt Management

Best Practice Guide (Appendix B).


16 Reporting & AnalysesThis section sets the policy on reporting on collection results and performance.

Reporting will be of two main types

Operational Reports – These are the day-to-day reports used by managers and collectors for the running of the department.

Management Reports – These are the general overview reports that are produced on a regular basis for general reporting on the status and progress of the department. They usually carry a lot less detail.

The policy should set out the types of reporting required, who is responsible for its production and its review; and escalation paths for any reportable or exceptional circumstances.

Guidance:

Further guidance is provided in the Debt Management Best Practice Guide (Appendix C).

17 Process ImprovementThis section describes the process of continual improvement: how it is managed and how staff can make suggestions. Also, assessing feedback from internal and external stakeholders.

The Debt Management Department will review processes within its remit on a continual and scheduled basis to improve collection rates, reduce risk, improve the service provided and reduce costs where practical.

Guidance:

Change to a process should be done with close attention to the mission and goals of the organisation and the Debt Management Department as well as considering the effect that changes might have on another department, the organisation as a whole and the customers.

Processes evolve and the policy should recognise this, so specific review cycles should be set, e.g. half-yearly, annually.

Ongoing collection and monitoring of relevant key performance indicators (KPIs) will help identify where process improvement initiatives should be focused.


Part B: Debt Management Department Procedures

1 Account SetupHaving the correct debtor account details is essential to efficient and effective debt collection.

The name and address must be accurate. For corporates, the name and/or department should be used. Contact phone numbers, Eircodes and email addresses are also valuable from a debt collection viewpoint and should be sought and verified.

For every new customer there should be a standard customer form including all the details required by the department to accurately bill and collect any monies due from the debtor.

Where the account details are being imported directly from an operational system, there should be scrutiny of the data entry and information gathering for that system to make sure there is enough detail for the Debt Management Department.

All customer contact information should be verified using at least one independent source.

2 Account MaintenanceWhere a collector becomes aware of a change in one or more details of the account contact or billing information, they should update that information immediately – especially: name, address and contact details. At the same time, they should record the old details as a note on the account in case there is any issue with the data update and to record historical details.

An audit of the contact details on the database should be carried out on a regular basis.

You can exclude accounts with whom there has been contact in the last 3 months. You can exclude any new accounts set up in the last 3 months. You can exclude any accounts with a zero balance and flag them to be checked next time

that they are to be billed. For the remaining accounts, you should validate their contact details.

3 Credit CheckingCredit Checking is a process performed by an organisation to establish if a customer has the ability to pay current or future debts. This may influence if they will be given credit terms or any conditions applying to their account. There are a number of times when this process may be completed such as:

At the time of Account Setup. When evaluating a customer’s claims of inability-to-pay. When evaluating whether to send a debt for legal enforcement.

When completing a credit check, the first step is to reconfirm the account holder’s name, address(es) and contact details so that you can be sure you check the correct individual or organisation.


For a company check:

Refer to your business information service (Vision-net, Dun & Bradstreet, etc) and enter the details of the organisation you wish to check.

Select and print out the full report including the credit score and all other data available. The credit score is often provided on a 0 to 100 scale with any organisation under 30 being in severe difficulty, those between 30 and 70 to be monitored closely and those over 70 should be secure.

Evaluate the additional data included in the credit report. The report may include information on judgments, changes in directors or business liens that can provide you with details on how the company transacts its business.

If appropriate, at the start of dealing with a customer you may also request credit references.

For an individual:

Check with your business information service or Stubbs Gazette to see if there are any judgements registered against the customer. (Note: At present, there is no credit rating service for private individuals in Ireland apart from Irish Credit Bureau which only available to credit institutions).

4 Creating a Bill / Invoice / Demand Notice

Note: The two most important factors to be addressed when creating an invoice or demand notice is that it is on time and accurate.

All the details must be checked to make sure they are accurate and it must be sent out as soon as possible after the debt has been originated. Where invoicing is automated the same factors are relevant and must be addressed at the point that customer data is being entered and in the process of creating and sending the invoice/bill.

Open and login to the accounting software. Open the relevant customer account and check that the customer name and all recorded

contact details match those of the customer you intend to bill. Open a new invoice in the customer account and enter the details of the product, services or

overpayment and how much the customer owes. Make sure that the invoice template includes information clearly identifying: your

organisation, terms and conditions, payment terms, a customer reference number, an invoice number and contact details for your organisation in case the customer has an issue or query.

Print the invoice and recheck the details for accuracy before sending it to the customer by post or email whichever is most appropriate.


5 Issuing a Statement

Note: A statement sets out a history of all debts, unallocated payments, credit notes and overpayments on a customer’s account. They can include a complete transaction history but usually only include open items on the account.

When issuing a statement:

Open and login to the accounting software. Open the relevant customer account and check that the customer name and all recorded

contact details match those of the customer you intend to send the statement. Select the statement option and print it. Send the statement by email or post whichever is most appropriate for the customer. Note on the debt management system that the statement has been sent.

6 Issuing a Credit Note

Note: A credit note states that a certain amount has been credited to an account and the reasons for this credit. It may be issued for a number of reasons including: where a customer was overcharged, an agreed discount is being applied, where there was a problem with a product or service or as part of a settlement agreement over an outstanding debt.

When issuing a credit note:

Where necessary, clear the nature and the amount of the credit note with your manager. Open and login to the accounting software. Open the relevant customer account and check that the customer name and all recorded

contact details match those of the customer you intend to credit. Open a new credit note in the customer account and enter the details of the product,

services being credited, the reason for the credit and the total being credited to the customer’s account.

Make sure that the credit note template includes information clearly identifying: your organisation, a customer reference number, an invoice number and contact details for your organisation in case the customer has an issue or query.

Print the credit note and recheck the details for accuracy before sending it to the customer by post or email whichever is most appropriate.

7 Receipting Payments ReceivedA receipt for payment received is a simple response to the debtor to acknowledge that the payment has been received and allocated correctly against their account. Issuing a receipt is a good way to double check that the allocation has been completed correctly.

Any payment received should be allocated as per the allocation procedure. Once allocated correctly, a standard template receipt should be automatically created by the

debt management system and forwarded to the customer by email or post.


If the customer has any issues with the allocation based on the content of the receipt, they should be referred to the team leader handling payment allocations.

8 Dealing with Debtor OverpaymentsA debtor overpayment is when a debtor sends payment for an amount greater than the values of the debt on the debt management system. Do not assume that this is always an error.

Any payment received should be allocated as per the allocation procedure. If there is a balance left over and above the total value of the debt on the debt management

system, the amount should be left on the account. Possible reasons for overpayment should be investigated such as: payment of penalties

charges (not yet charged to the account), payment in advance of instalments or regular payments, duplicated direct debits or standing orders, attempt to pay-in-full a loan or schedule of future repayments.

A standard template letter should be sent to the debtor informing them of the overpayment and requesting clarification. It should offer the option to refund the overpayment or leave the balance on the account to cover future debts.

9 Sending a letterMost letters going from the Debt Management Department to the debtors will be:

Automated by the debt management system In a standard template Written by a Debt Management Department member of staff.

Automated letters require no input from the Debt Management Department but the content do need to be carefully written and reviewed regularly.

Letters using a template are generated by the collector under special circumstances and the content should be reviewed for errors before it is sent to the debtor.

Where a letter needs to be sent and there is no template, it needs to be written carefully taking note of the style and approach used in the automated and template documents.

A copy of this letter should be saved to the debt management system. The reasons for such letters should be reviewed regularly and new templates created if they are being used more regularly

The letter should be posted the same day that it is written.

10 Sending an EmailThe process for sending an email mirrors that for sending a letter. The only difference is that the email should be saved automatically or manually to the debtor account in the debt management system.

For important emails it is advisable to add a request for a delivery receipt and or a read receipt and to record same in the debt management system. Consideration should be given using a secure email system to protect against hacking.

Email addresses should be verified with the debtor and its use be covered by the terms of business.


Open the debtor account. Select the email option. Select the appropriate template for the communication you want to send. Send the email with read receipt and delivery receipt as appropriate.

A copy should be automatically saved to the debtor account.

11 Sending a TextA text is a direct message going to the debtor’s phone and it is limited in the detail that can be included. For clarity and data protection reasons texts should only be used as reminders or notifications of letters or emails being sent.

Open the debtor account. Select the text option. Select the appropriate template of free text. Send the text.

A copy should automatically save the debtor account.

12 Processing a Prescribed Financial StatementA “Prescribed Financial Statement” (PFS) is an official form prescribed by the Insolvency Service of Ireland (ISI) for use in applying for protection under one of its schemes. It should be used when the Debt Management Department needs to evaluate a debtor’s financial status and their ability-to-pay.

The PFS is filled out by a debtor and lists all of their income, expenditure, creditors, debts and other liabilities, assets, guarantees and additional information.

The format used should match that used by the Insolvency Service of Ireland for consistency (See details on IS website at: https://www.isi.gov.ie/en/ISI/Pages/Prescribed_Financial_Statement).

When deemed necessary select a copy of the prescribed financial statement document and send it to the debtor by email or post. Set the debtor a realistic time frame to have it completed and returned.

A note should be made on the system that the document has been sent and where necessary it may be best to place the account on hold while waiting for its return and evaluation.

Send the debtor an email reminder or phone them a few days after the initial document has been delivered to both remind them it needs to be returned to the Debt Management Department and to check if they need any help in completing it.

When the document is returned it should be attached to the debtor account. It is sensitive information so should not be printed unless necessary and should only be accessed by those that are analysing the action to be taken on the account.

13 Methods of Payment

Note:

It is important to offer debtors as many methods of payment as are practical to make it easy to pay and to remove any obstacle whether real or imagined.


The Debt Management Department accepts payment from debtors via the following means:

Bank Transfer / EFT Credit/Debit card over the phone Credit/Debit car through the payment portal PayPal Billpost.

Payment in cash is not accepted for security reasons.

14 Collections

Note:

We are assuming that the customer has 30 days in which to pay their invoice. If the payment terms differ then the contact schedule should be adjusted.The following outlines the actions to be taken with a customer from the time the invoice/bill has been issued until it has been paid in full or debt management activity is ceased.

It is important that the customer is contacted early and regularly in a consistent manner until the debt has been paid. There should never be more than a 10-day gap between each contact. Letters should be clear as the: the amount due, the date due, the consequences of non-payment, your contact details and how payment can be made.

14.1 Early Stage Debt Collection Day 20 – Contact the customer using a standard email/Letter template to confirm that they

have received their invoice, that they have no issues with it and that they are aware of the due date. Provide them with contact details of who they should call if they have a query, a dispute or any difficulty with paying on the due date. Include information on how they can pay. This letter reminds the customer of the invoice closer to the payment date and reinforces your expectation of payment on that date.

Day 35 - Contact the customer using a standard email/Letter template to notify them that their invoice is currently overdue. Include a sentence of the form “Please ignore this letter if you have already made payment in the past 5 days”. Provide them with contact details of who they should call if they have a query, a dispute or any difficulty with paying. Include information on how they can pay.

14.2 Past Due Date Debt Collection Day 45 – Contact the customer by phone. Identify yourself and confirm that you are

speaking to the correct person (i.e. the individual or for corporates, the Creditors or Accounts Payable department). Explain the nature of your call and request immediate payment in full. The goal of this call is to confirm how and when the customer is going to make payment. Follow this call with an email to confirm what was agreed during the call. Make a note of everything discussed in the debt management system and the nature and date of the next follow-up action.

Day 55 – Contact the customer using a standard letter template to notify them that their invoice is still outstanding and to warn them of any sanctions (e.g. withdrawal of service, legal action, garnishee order) they face if it is not paid within 7 days. Provide them with


contact details of who they should call if they have a query a dispute or any difficulty with paying. Include information on how they can pay.

14.3 Late Stage Debt Collection Day 65 – Contact the customer by phone. Identify yourself and confirm that you are

speaking to the correct person. Explain the nature of your call including reference to the previous letter that was sent to the customer the customer and request payment in full. If the customer agrees to pay take note of how and when then will make payment and schedule an action to check it has been received. Otherwise notify the customer of the sanction or other action that will be the next step. Note all details on the debt management system.

Day 75 – Agree the sanction to be enforced against the customer with your line manager where appropriate. Process the sanction and contact the customer by letter to confirm the steps that have been taken.

Stay in regular and consistent contact with the customer and progress through each sanction in order always contacting the customer to warn them of the next sanction and to inform them when it is enforced. Each sanction should be processed at the earliest date possible after the last one. Where appropriate, contact the customer by regular template email or letter to notify them of your availability to talk if they have a query a dispute or any difficulty with paying. In certain instances, letters may need to be delivered by recoded delivery or registered letter. Make a note in the debt management system of each contact with the customer.

15 Payment PlansA Payment Plan is a method for the debtor to repay their debt in a number of regular payments over an agreed period of time. It is a payment option that should not be offered to a debtor or accepted from a debtor unless they have shown that they are unable to pay in full and can clearly demonstrate their ability to pay the debt over the period of the payment plan.

Where it is agreed between the collector and the debtor that a payment plan is the best way of clearing the debt, the first step is for the collector to confirm with their team leader that they can offer a payment plan in this case. The debtor may be asked to complete a prescribed financial statement (PFS) to prove their means (see PFS procedure above).

An initial payment plan of equal amounts to be paid over three monthly payments should be offered to the debtor. Only where a debtor can show that this is unaffordable can an extended term be offered. The maximum term allowed is 12 months from the date of the original invoice. For payment plans of a longer duration, DM Manager approval is required.

Once a payment plan has been agreed and approved by the relevant manager, it should be put in writing to the debtor in a standard template payment plan agreement letter to be signed and returned.

Each step of the negotiation, the details of the final agreement, a copy of the original agreement letter and a copy of the signed agreement letter should all be saved to the debt management system and the debtors account marked as “Under Payment Plan”.

The payment plan should only be accepted where payments are made by standing order unless a DM Manager agrees to a variation.


The payment plan should be monitored by the debt management system and if a payment is missed the collector should be notified and an automated letter or email for non-payment of a payment plan should be sent to the debtor followed by one phone call.

If the debtor fails to bring the payment plan back on track, the agreement will be void and the Debt Management Department will return to looking for payment in full and enforcement if applicable. In such circumstances, the payment plan option will no longer be available to the debtor.

16 Dispute Management (Dealing with disputed bills)Dispute management covers a range of issues from a dispute over the debt amount to problems with the product/service to complaints about a member of staff of the organisation.

When a debtor raises a dispute of any nature, it should immediately be recorded on the debt management system and a relevant dispute code should be added. At this point the team leader should be notified with full details of the dispute and the collections process should be put on hold until the dispute is resolved or determined by DM Management to be irrelevant.

If the dispute requires a clarification or correction from the organisation, the debtor should be notified of the timescale in which this will be completed. If there is any delay, the debtor should be contacted and made aware of it along a new target date for a response.

Where the dispute required a discussion between the organisation and the debtor, this should be handled by the team leader or DM Manager as is seen appropriate, depending on the nature of the dispute.

When the dispute is cleared, the outcome and any actions to be taken by either party should be recorded on the debt management system. At this point the collection process should resume taking account of any arrangements made.

17 Dealing with Partial PaymentsPartial payment is the receipt by the Debt Management Department of an amount which is less than the amount of the original debt without there being any agreement to such or to a payment plan.

As with any payment received, it should be immediately allocated and receipted. A note should be made on the system of the partial payment.

The receipt should be a template partial payment receipt letter which will include: thanks for the payment, details of the original amount due, the amount received, the fact that no payment plan is in effect and a copy statement and original invoice should be attached.

Note: Partial payments are used by many debtors as a tactic to try and give the organisation something in the hope that they will defer sanctions or to stop chasing them even if only temporarily.

18 Dealing with Inability to Pay / Hardship CasesWhere a debtor is claiming they are unable to pay, it must be noted than in some cases this may be a matter of great stress for them and there may be other issues in the background that are outside the remit of the Debt Management Department. The debtor should always be dealt with professionally and courteously.


Once a debtor claims they are unable to pay, a note should be added in the debt management system and the reason code set to “Debtor claims inability to pay”.

The debtor should then be asked to complete a prescribed financial statement (PFS) and to provide any additional proof as is deemed necessary – see PFS procedure earlier. In the case of corporate debtors a set of audited accounts should be requested.

Where it is accepted that the debtor is unable to pay, the debt should be frozen and the standard collection process should be put on hold. No further interest or charges should be added to the account.

A payment plan should be offered and is not financially possible for the debtor, a team leader should discuss the situation with the debtor with a view to finding a workable solution.

A plan of contact should be agreed with the debtor and their financial circumstances should be reviewed annually or as otherwise deemed appropriate.

The debt should also be secured through a written agreement signed by the debtor which recognises the debt and confirms the debtor will pay when they can, even if the debt goes beyond the statue barred limited period of 6 years.

19 Dealing with Refusal to PayA debtor is only classed as refusing to pay when they are communicating with the Debt Management Department but there is no financial reason for them not being able to pay or they have no valid dispute which would justify their not paying.

Once a debtor is classed as refusing to pay, the team leader should be notified. A note should be put on the debt management system and the reason code set to “Refusing

to Pay”. The team leader should phone the debtor, advise them of the organisation’s assessment of

the situation and the consequences of continued refusal to pay. On foot of this phone call, the team leader will determine the course of action, consulting

with the DM Manager if necessary. A letter should be sent to advise the debtor of the action being taken.

20 SanctionsSanctions should only be considered when the all of the scheduled contacts with the customer have been made and there is no sign of progress towards payment being made in a timely manner.

20.1 Place Account on StopAt any stage during the collection process it may be decided that the best course of action is to place the account on “stop”. This means that no further products, services will be supplied to this debtor and any payments due to them will be frozen.

The team leader has the authority to place an account on Stop. A standard template warning letter or email should be sent to the debtor informing them

that their account is will be placed on stop and remain so, if payment in full is not made within the next 7 days. Provide them with contact details of who they should call if they have a query a dispute or any difficulty with paying. Include information on how they can pay.


If there is no acceptable response to the warning letter, the stop should be placed on the account and standard template confirmation letter sent advising that the stop is place and will remain so until payment in full has been made.

The reason for the decision needs to be recorded on the debt management system and the account code needs to be changed to “On Stop”.

20.2 Netting InternalNetting is the term used by the Debt Management Department to describe the process of recovering debts from any financial amounts due to the debtor from the organisation.

At any stage during the collection process, it may be agreed with the debtor that the debt can be recovered from monies that are confirmed to be due to them from the organisation.

The Debt Management Department will run a report to confirm which debtors are also due further monies from the organisation.

The collector shall contact the debtor in writing, email and by phone to request payment in full or agreement to net from confirmed future payments due.

If the debtor refuses to agree, the DM Manager has the authority to impose the netting. When the netting is imposed, a further letter should be sent to the debtor informing them of

the decision and providing them with contact details to discuss the debt or to query the netting decision.

Note of the decision should be made on the debt management system and the account code should be changed to “Netting”.

20.3 Netting ExternalExternal Netting follows the exact same process as internal netting. The only difference is that the debt is recovered from payments due to the debtor by a separate organisation.

21 Enforcement

21.1 Sending Account to Debt CollectorWhere all actions up to but not including legal action have been tried and the debt is still outstanding, the Debt Management Department may consider passing the debt to a third party debt collection firm.

For a debt to be passed to a debt collection firm, it needs to be signed off by the Debt Management Manager.

Only debts which have no open disputes and which have current contact details should be referred to a debt collector.

Before the debt is referred a final warning letter or email should have been sent to the debtor informing them that if payment is not received in 7 days, the debt will be passed to a debt collector

If there is no acceptable response to the warning letter, the account should be passed to the debt collector and standard template confirmation letter sent advising that the debtor of same and the account code should be changed to “With Debt Collector”.

Accounts will remain with the debt collector for a period of up to 90 days. This period will only be extended by agreement of the DM Manager where the debt collection company can show they are making progress with the debtor.


All debts returned from the debt collector should come with a full activity report including letters sent, phone calls made and notes of discussions with the debtor. This should be attached to the debtor account on the debt management system.

21.2 Sending Account to Legal ServicesAny and all accounts that have gone through every step of the regular collection process and which either are not suitable for an alternative sanction or have had alternative sanctions attempted without success should be referred for legal processing.

All accounts above a specified threshold (e.g. €1,000) in total value can be sent to legal while any accounts under that level need to be reviewed an signed off by the DM Manager before they can be referred.

It is for the legal department to assess each case on its merits and to decide on the best course of action.

Before a debt is referred to the legal department, a final letter should be sent to the debtor informing them that if payment is not received in 7 days the debt will be passed to a solicitor.

If there is no payment the debt should be referred and the account code should be changed to “With Legal”.

Only debts which have no open disputes and which have current contact details should be referred to the legal department.

If the legal department return the debt with no action taken, they will provide a reason which should be added to the debt management system notes and the debt evaluated to determine the course of action.

If the legal department takes actions the debt, they will provide regular updates on its progress which should be added to the debt management system notes.

All debts which are taken to court by the legal department, they should seek to recover the full amount of the debt plus any and all costs.

22 Attachment to EarningsAttachment to earnings without legal action may be available to certain organisations in which case, it may be instituted before legal action. For other organisations, it is only an option available to the Debt Management Department after registering a judgement and sending out a sheriff have failed.

The first step is to send a final letter to the debtor informing them that if the debt is not cleared in 14 days, the Debt Management Department will proceed to have the debt recovered by attachment to their earnings.

Only debts which have no open disputes and which have current contact details should be considered for attachment.

An attachment application file should be completed with a full history of the debt. This should be referred to the DM Manager who needs to sign off the account and pass it to the individual in the Debt Management Department who handles all attachment actions.

At this point an analysis of the account will be made including proof of current earnings as received from the debtor or through a request for information from Revenue. The debtor’s expenses as supplied by the debtor or calculated by department based on Insolvency Service of Ireland’s “Reasonable Living Expenses” guidelines.


Once the decision has been made, the attachment should be signed off and the relevant instruction should be sent to the employer of the debtor. At this time a letter should be sent to the debtor informing them of the decision and providing them with contact details to discuss the debt or to query the attachment decision.

A note should be made on the debt management system to record the decision and the account code should be changed to “Under Attachment”.

23 Account Write-off (& Recoveries)Write-off should only be considered after every other possible avenue has been exhausted to recover the debt and there is no foreseeable prospect for recovering it.

Where a debt has reached the stage that write-off is being considered, a write-off approval form should be completed by the collector and it should be passed to his team leader. At the same time the collector should change the account coding to “Write-off Requested”. The write-off approval form will include: identification and contact details of the debtor, details of the debt, details of the recovery efforts and the reason for suggesting write-off.

The write-off of a debt needs to be agreed by the team leader before being passed to the DM Manager who has the final say. At either stage the debt can be returned to the collector with instruction for another avenue to try or with refusal to write-off.

If the cumulative debt of the debtor is less than €10,000, the Debt Management Department has delegated sanction from Dept. of Public Expenditure and Reform (DPER) for write-off.

If the cumulative debt of the debtor is more than €10,000, the DM Manager must draft a submission for write-off to DPER. DPER are also interested in other cases involving a serious issue of principle, as set out in Appendix C.7 of the Guide.

24 Vulnerable DebtorsThe vulnerability of a debtor will always be subjective and is at the discretion of the Debt Management Department team leader. If you are in doubt, it is imperative that you bring the matter to the attention of a team leader and the appropriate decisions can be made.

Vulnerable debtors can encompass many different groups within society and include:

Persons with intellectual disabilities or mental health difficulties Persons who are hearing impaired Persons who are visually impaired Persons who are elderly Persons who have difficulty in reading and writing Persons who have a terminal illness Persons who are willing to pay but do not currently have the financial capacity to pay.

If a collector believes that a subject of our enquiries may be deemed as a vulnerable person or the debtor requests help or a grace period as they are suffering from physical or mental health issues, immediately place the account on hold, make a note on the debt management system, and notify a team leader.


The account should be reviewed by the team leader and they will advise how to proceed with the matter. The options are:

This does not constitute a vulnerable debtor and to continue collections. That a brief grace period should be allowed and another review then held to see if it

should be extended or if regular collections should resume. This is a serious case and the debt should be written off and help sought for the

debtor. A vulnerable person review document should be sent to the debtor, or a designated

person, which will look for information to back-up the claim by the debtor. This should be handled very sensitively.

Where possible and deemed necessary, the team leader should bring the case to the attention of appropriate support services. It is best if this is done in partnership with the debtor, always be conscious of respecting the debtor’s privacy and data protection rights.

The team leader will handle the further review and management of the matter from this point until it is paid or written off.

Make sure that each contact whether by letter, email of phone is fully documented on the debt management system.

Remember that it is important to treat the debtor fairly and respectfully at all times. If requests are made not to contact the debtor at certain times or in certain manners, they must be adhered to. If there is any uncertainty regarding any step in the process, it should be bought to the attention of a team leader for guidance.

25 Abusive DebtorsNo member of the Debt Management Department or the organisation as a whole should have to endure abuse from a debtor for any reason. It must however be recognised that the abusive behaviour may be a reaction to difficulties the debtor is facing outside the debt situation being discussed. The collector also needs to evaluate if the debtor might be classed as a vulnerable debtor.

Where a debtor’s behaviour becomes abusive, the collector should rely on their collection training for dealing with such situations and try to work through the event. A note should only be added to the debt management system if the abusive behaviour continues.

If no progress can be made in the call due to the behaviour of the debtor, the collector should end the call in a civil manner and refer the matter to their team leader.

The team leader should phone the debtor outlining the difficulty the Debt Management Department has with the behaviour of the debtor. The call should also be used to advance the collections efforts.

If the behaviour continues and no progress can be made with the debt, a letter should be sent to the debtor reiterating the difficulty the Debt Management Department has with the behaviour of the debtor and outlining the next step - probably a sanction - that will be taken unless the debtor can deal with the Debt Management Department in a civil manner.


26 Missing DebtorWhere a debtor is no longer at the address on the debt management system and is not contactable on any of the phone numbers or email addresses provided, they can be classed as a “Missing Debtor”.

Where a debtor is classed as missing, a note should be put on the debt management system, all standard collections activity frozen and the account code changed to “Missing Debtor”.

An internal trace should then be conducted. This involves: Requesting a forwarding address from whomever is at the debtor’s last address. Having a field officer call to the last known address. Checking other databases for alternate contact information. Checking with local offices for information. Checking social media for information. Requesting tracing help from other organisations (e.g. Revenue, DSP).

Where an internal trace is unsuccessful, the team leader should be notified and they can make a decision if an external tracing agent is required.

Where it is learned that the debtor has left the country, attempts should be made to establish contact and the account reviewed regularly.

Where the external tracing agent is unsuccessful, the account should remain on hold and be reviewed annually, at minimum, to see if any new contact information becomes available.

27 Allocating PaymentsA vital part of the debt management process is an effective allocation process. Failure to allocate on time or accurately can result in collections activity on accounts that have paid and additional administrative work in rectifying errors.

All payments received by the Debt Management Department should be allocated within 24 hours.

On a daily basis, all payments whether by bank transfer or direct to the department need to be allocated. The allocation team should apply each individual payment to the correct debtor account and the correct debt on that account.

Where the debtor is not identified, the balance should be applied to a holding account and a copy of the cheque or payment record should be made and added to a holding account payments file for further investigation. These payments may later be identified when more information is available or the customer identifies the payment as theirs as a result of another collection contact.

Where the debtor is identified but there a number of debts on the account and there is no clear remittance, the payment should be allocated to the account generally but not to any specific debt and the debtor should be contacted by standard email or letter seeking clarification.

Under no circumstances should any allocation be made where there is a question of its accuracy.


28 Deduction ManagementDeductions are any amounts which have to be credited off a debtors account for whatever reason. Examples of deductions are credits for overpayment or an agreed credit for settlement of a debt. To manage and control deductions, there should be one team leader or manager responsible for them.

When any member of the Debt Management Department comes across a potential deduction, they need to make a note in the debt management system and flag it to the team leader.

The team leader should review the circumstances and advise whether to allow the deduction or to refuse it and look for payment of the balance from the debtor.

Deductions should be tracked, recorded and analysed to see their cause and to look for ways of minimising their occurrence in the future.

29 Codes & Record KeepingThe following coding and features should be available within the debt management system for processing and analysis purposes.

29.1 Account CodingAll debtor accounts must be tagged with an account code to indicate their status. This aids with tracking and reporting on debt management progress. It also allows for a more focused approach on the accounts that need action.

The following are the account codes that must be used. Where a debtor account is found that does not comply with one of these notify the DM Manager who will evaluate if a new code is required.

Dormant Active Disputed On Stop Missing Debtor Netting Under Payment Plan With Legal With Debt Collector Under Attachment Write-off requested Write-off.

While a collector is working the debt account, they should review the account code to make sure it is still valid and update it where there is an issue.

29.2 Reason CodesEvery live debt on the debt management system should have a reason code attached which explains the reason why it is not paid yet. This aids with tracking and reporting on debt management progress. It also allows for a more focused approach on the accounts that need action.

The following are the reason codes that must be used. Where a debt is found that does not comply with one of these notify the DM Manager who will evaluate if a new code is required.


Debtor did not receive demand Debtor did not receive letter X Debtor claims inability to pay Debtor Refusing to pay Debt is disputed Payment promised Payment plan in progress

While a collector is working the debt, they should review the reason code to make sure it is still valid and update it where there is a change.

29.3 Dispute CodesEvery debt on the debt management system that is flagged as being in dispute should have a dispute code attached which explains the basis of the dispute. This aids with tracking and reporting on the disputes progress. It also allows for a more focused approach on the accounts that need action.

All debts not in dispute should have a null dispute code. The following are the dispute codes that must be used. Where a debt is found that does not

comply with one of these notify the DM Manager who will evaluate if a new code is required.

Debtor did not receive demand Debtor did not receive letter X Debtor claims inability to pay Debtor Refusing to pay Debt is disputed Payment promised Payment plan in progress.

While a collector is working the debt in dispute they should review the dispute code to make sure it is still valid and update it where there is a change.

When the dispute is cleared the outcome should be noted on the debt management system and the dispute code should be reset to null.

29.4 Account Note WritingFor every action taken on a debtor account there should be a note on the account on the debt management system or file. This note will explain what happened and should record the next action, who should take it and the date when it is to be taken. The debt management system will add a note for every automated letter or email and it is up to the collector to add notes for their actions.

It is important to remember that everything you write could possibly be seen by a customer at some point (e.g. court action) and will be seen by managers and colleagues, so make sure the notes are professional, factual and do not contain anything you would not like shared with the customer.

Make sure the notes are clear and can be easily understood by anyone. Remember it is a note. It should be concise but include all relevant detail. Avoid using short hand or abbreviations unless these are agreed departmental standards

and are documented somewhere.

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