I was feeling a little under the weather much of this week. Normally this would not be a concern, I would just soldier on, keep going.

In the current environment, with COVID cases rising again locally, everything seemed different. So despite not showing classic COVID systems, I pretty much spent the week stuck indoors my days filled with taking lateral flow tests and feeling sorry for myself.

Despite being isolated at home however, in some ways it was even easier to carry on working. If I was in the office, my colleagues would, quite rightly, tell me to get out, go home and stop infecting everyone else. There are no such concerns working remotely, there is no spreading on Zoom or Teams meetings and when you are sitting at home… bored… the computer beckons… then just one email, just one spreadsheet and you are hooked in for the day.

So what started out as good intentions to have a lemsip and get some rest, somehow seemed to evaporate by about 10am… and the day was done. Need to be stronger next time!

But, this time off, or slow down at least, did give me a bit of a chance to catch up with a few folks on affordability and some of the current trends. A few factors do seem to all be colliding at the same time.

• End fo furlough. This finished at the end of September. Impacts appear to be slightly lower than some of the expectations at the start of the pandemic. It will however take sometime to flow through to businesses and cash flows and could impact employment, especially in some sectors
• Universal credit cut. The £20 boost for universal credit, made during the start of the pandemic, has now been removed. It is a 25% drop in income support for some. Against a background of increasing prices this has the potential to further squeeze affordability for those impacted.
• Increasing fuel costs. The price of natural gas has more than doubled since the spring, and reportedly an expected increase in oil prices on the way too. This will increase expenses for many consumers, especially heading into winter and put pressure on costs for businesses, which will also be passed onto the consumer. (I was reminded that with the price cap mechanism in GB, the price increases will be lagged, albeit this does not help the energy supply businesses, bit impacts there – could be only 10-20 left is the thinking if this continues).
• End of pandemic restrictions. Pandemic restrictions seem to have been pretty much ended here now and certainly looking at the traffic (jams) on the road, people are getting back to the old ways of doing things. This may be good news for many, no-one misses home haircuts I am sure, but during lockdown, with remote working, a lot of people saved money. Getting back to the office now means extra expense on commuting, coffees, sandwiches at lunch. And, if oil prices do increase, commuting is about to get a lot more expensive too.
• Supply chain issues. Supply chain issues in the UK have been widely reported. Whilst this is also a global phenomenon, a combination of factors apparently means the UK is more affected than most. Shortages now will likely translate to price increases in the future… inflation is now expected to increase. All this continues to put pressure on the consumer and costs (especially if you do not have a job, or your wages (or pension) do not keep pace with inflation), reducing affordability

The impacts of all these will not, of course, be seen suddenly and indeed will be different in different segments of the population. However, the factors are there, and there is a risk they can combine to stretch affordability for an increasing segment of the population, resulting in increased arrears and for those already there, more financial difficulty. It does not all seem very cheery, I agree

What is more optimistic, however, is just how much customer-focused infrastructure has been put into businesses the last few years to help with these situations. Yes, I know there is probably more on the way with the FCA focus on outcomes with customer duty, but we have come a long way already. The tools are there, we just need to make sure we use them and build on the progress to date.

So back to work then… now where is that Bacon sandwich.

Have a good weekend everyone.

Lockdown has changed us in many ways, apparently some we don’t even realize. A new example recently came up during the weekly supermarket shop.

Converting to online

Online delivery has really taken off over the last few years. Stuck at home, locked down, it has been a lifeline for many folks, reducing the risk from contact for customers and employees alike. However, despite these initial drivers, many of us have also found it, well, just really convenient.

Now I have always been a user of online, preferably mobile app, shopping. Travelling quite a bit for work in the old days, many was the time, when I would be shopping (normally on the 18:40 from Manchester). It added extra hours to the day to get stuff done.

However, at the time, shopping for milk, eggs, flour, butter, baking powder, sugar, blueberries and maple syrup never really crossed my mind. (Blueberry pancakes btw, if you are culinary-minded!).

Supermarket shopping was always something I loved to do. Yes, getting there was a chore, but once there it presented me with a shop full of combinations and possibilities. Not something I thoughts of giving up until I had to.

But now I have, what a time saver… click, click, click and it is done.

How things have changed

And, this brings me on to what I noticed has changed. Yes, online shopping has been great, but what struck me, is how this has also changed our expectations and perceptions of time too.

Only last week I was in the middle of something, the doorbell went and the supermarket shop had arrived.

My reaction, not “how convenient, this saves me so much time”, but more “sigh, the supermarket is here, I have to put it all away”…

I mean listen to it… I now get the food, selected for me, packed up and actually delivered to the front door… probably saving me 2 hours in my week and I am still grumpy about it… what do I need next? Do I need the food actually put in the cupboards, have it cooked for me… seriously what gives! Are we all getting lazy?

Actually, I think it all comes down to our ever-changing expectations. As our world accelerates and becomes more convenient, so the bar of expectations raises too.

Transformation acceleration

Back at the office we have also been through massive changes too.

Remote working, use of video calls, file sharing, instant collaboration across borders, the world has become a more online, instant and smaller place. There is no doubt this has been great and saved us a huge amount of time too.

However, has this also changed our perceptions of time too? Are we more grumpy about the lack of instant response to our messages, slowness in making decisions, speed in booking meetings or having the technology not working perfectly when you jump from one meeting to the next? Okay I admit it, maybe I am, sometimes!

Quick, quick, slow

More and more as things open up, we are going to be back out and about again. It will be part wonderful and part stressful especially the later if we don’t reign in our expectations a little I fear…. if you have ever tried joining a conference call on the train, you already know that a video teams call is just not going to work!

And, sometimes, things just take time. Time allows events to pass, ideas to percolate and even thinking to happen. Just like making dinner, sometimes if you want something great it cannot be rushed…

We just need to be conscious of our behaviour, taking it fast when needed, but also respecting our (and each others) time when it can add more value.

As I get out and about, it will be something to reflect on… likely looking out of the window on the train… in between online shopping on course!

Have a good weekend everyone.

Petrol crisis, gas crisis… carbon dioxide, chicken, tomato sauce, milkshakes, beer… the headlines have been rich the last few weeks with stories about labour shortages and supply chain issues.

Outside there shortages themselves, the headlines also reveal a couple of interesting observations.

1. Just how quickly we resort to panic buying – individualism rules, our bias to to look after number one, of family unit, rather than playing as a team across society
2. The headlines in some way clearly define what we really care about – we are not that interesting in ‘just in time’ – interconnected supply chains and resourcing, but impact my sneaky friday night take out (okay or Tuesday lunchtime), I am going to be upset and pay attention.

It has now been a year since the last wave of panic buying, the great toilet roll crisis of 2020 (yes going to the toilet is clearly something else we all care deeply about too, who would have thought!). In the intervening time we seem to have learned little, despite arguably the pandemic bringing some communities closer together for a while.

Faced with shortages, however, to keep the show on the road, not to mention the car and getting the kids to school, stocking up makes still makes sense. It is still our psychological default, nothing has changed.

Everything is linked

Last week I mentioned inflation, specifically wage inflation, which is a related specter that is also beginning to raise its head again.

Just as in our personal level, at the individual business level, keep the show on the road, paying more just makes sense. However, if we all do it, inflation will kick in, and if we panic hyperinflation is a real danger.

In some ways, how could we not expect impacts from the pandemic? You cannot shut down the global economy, pretty much for a year, sit people at home, change the way they work and not expect change.

However combining these impacts, lurid headlines, amplified by social media, overlaid on our own cultural bias on self-reliance, it is a heady mix. I fear we are at a critical time.

Balloon inflation

This brings me back to work and the question for this week. If we do see significant inflation, what will the impact be on the collections industry and what should we do, today, to mitigate impacts?

As those who bought a house in the 1970s, with a mortgage for £10,000, found if inflation can erode debt. The value of £1 in 1970 was more than it is in 2020. Yes, interest rates were high at the time, but if they drop again in the future, and you still have a job, then paying off a debt can become easier.

Critically this does rely on borrowers having a job and wage increases to keep pace with inflation.

For those without a job, stretched incomes or in an industry where wages are static, the outlook is troubling. The ability to pay decreases, arrears will increase together with defaults.

Then we come to the time value of money. With inflation, the effective value of money will erode faster. Simply waiting to collect or receive funds will actually reduce the value of what is received (in purchasing power terms).

Debt purchasers, with long investment horizons could be particularly hit, in terms of valuations, and collecting early is going to be key. Maximise cash flow, keep the money working for you.

Utility defaults

This brings me neatly to the topic of the recent wave of collapse in the UK utility provider market. Another two suppliers are out of business this week.

This is, of course, distressing for their customers, and particularly a companies employees, who are now in a position to have to find new roles as the customers get consolidated into larger providers.

With wholesale supply prices high and fewer providers in the market, prices will ultimately need to go up (…more inflationary pressue). However in the short term cash flow again is critical to stay afloat.

For those on the precipice of insolvency it may be too late. However for those still with a little time the importance of a robust accounts receivable and collections process cannot be overstated.

Cash and extra cashflow is sitting right there, on the balance sheet, that can make a real difference to people’s lives (including helping customers get out of debt)…

Something to ponder more on Monday. In the meantime have a good weekend everyone.