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Reinventing income collection


The Universal Credit roll-out is acting as a catalyst for change as landlords now need to rethink how they engage with their tenants, says John Doyle

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With the Universal Credit roll-out continuing apace, how prepared are social landlords to manage these changes?

There is recognition from across the sector that landlords do not feel ready for the roll-out of full Universal Credit.

There are a number of reasons for this. The constant delays and changes to the implementation of Universal Credit have been hugely frustrating. The goalposts have been ever moving for landlords looking to prepare their teams for the storm ahead. That means the latest plans for widespread and rapid roll-out of the full service will hit organisations hard.

However, our own research has shown that two-thirds of landlords do not feel that their boards understand that improving the way they engage with customers is going to be key to protecting rental income in the face of Universal Credit.

Landlords that have completely adapted their approach to income collection and engagement will feel the most prepared. The key is building capacity into teams, and stripping out mundane and time-consuming tasks, so income teams can have better conversations with customers.

It is hard to see how the existing approaches to supporting small numbers of Universal Credit claimants can be scaled up to deal with the many multiples that will be transferred over in the coming months. They are simply too resource intensive.

There are some organisations, like Homes in Sedgemoor and Your Homes Newcastle, that have done excellent work in preparing for the roll-out and have been sharing many of their findings with the sector at large.

Is there enough awareness in the sector about the dangers for landlords if they don’t get it right?

How an organisation views the impact and dangers of Universal Credit will depend on whether they are addressing the challenge from an operational or strategic perspective.

In most cases the operational teams, which deal with income collection, are clear about the size of the task and the impact that Universal Credit will have on a large number of their customers.

However, it is not their role to anticipate the wider organisational dangers. That is a job for leadership teams. Universal Credit needs to be a challenge for the whole organisation. Every part of the business has a role to play.

Those who understand the potential risks have adopted this approach. But in some quarters there is either a lack of understanding of the real impact Universal Credit is going to have on their collections performance, or a belief that it won’t take long to return to business as usual.

With arrears likely to rise and the costs of rent collection set to increase, what impact on cash flow is Universal Credit likely to have? What do landlords need to do to protect their bottom line?

Cash flow is more critical than the bottom line for all organisations.

In other sectors it is simply called over-trading, where your assets look solid but you cannot meet your financial commitments as they fall due. This has never really been a problem for social landlords. However, with the impact that full-service Universal Credit will have on collection rates and the inevitable delays in payment, there is significant potential that we will see some landlords experience a cash flow crisis.

Universal Credit will mean that the days of collecting 99%-plus of their annual rent roll are over.

That means landlords need to start thinking more strategically about income collection as a challenge for the entire organisation to own and move away from the days where it has been treated almost as an administrative function.

How are landlords adapting their approach to income collection? Can you share any examples of good practice?

Those landlords that have started to address the future challenges are tending to move towards a centralised model, performing triage at the start of the arrears process. The traditional ‘patch-based’ approach, where frontline officers are responsible for all the collections process on a given territory, is having to be seriously modified.

The need to engage more frequently with more customers than under the previous housing benefit arrangements means that collection methods need to be as efficient as possible – so at a lower cost, but also as effective as they can be.

“Without adopting the right kind of technology, landlords will fail to deal with Universal Credit.”

There is no silver bullet solution to striking this balance, but low-cost early intervention methods for smaller arrears balances need to be deployed.

This in turn should mean that the more expensive face-to-face approach of patch-based models are reserved for those cases that need it most.

With rents having previously been paid directly to organisations through housing benefit for many customers, to what extent will social landlords have to engage more closely with these residents?

This is the crux of the challenge for social landlords.

On average, 65% of revenue was paid directly under the housing benefit system. This relegated income collection to an administrative function with little need for strategic guidance.

Now landlords have to engage with each individual customer, not only to ensure that the switch from one system to the other is as smooth and timely as possible, but then to monitor and manage that relationship on an ongoing basis.

The dynamics around all of this and the critical link between customer engagement and getting paid is well understood in other sectors. Social landlords should look to them for guidance.

How big a role will technology play in the future of customer engagement?

Without adopting the right kind of technology to schedule and automate a clear customer contact strategy, landlords will fail to deal with Universal Credit.

The number of variables involved in managing the rent accounts of thousands of customers means that the dependence on accurate and timely data has never been so critical. This needs to be used to trigger the right kind of customer engagement message at the right time.


John Doyle is managing director at Housing Contact. He has 20 years’ experience providing technology solutions designed to help landlords increase engagement with customers and protect rental income.


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