New figures show that debt collection claims are rising in Sweden. When unpaid invoices are sent to debt collection, companies are faced with liquidity problems and an overloaded finance department that finds it difficult to handle the increased debt collection demands and daily work. If your business is to cope with the increase, you need to be able to manage your debt collection processes more smoothly and efficiently. This allows you to deal with problems proactively, increasing the chances of getting paid. At the same time, you nurture customer relationships even when problems arise. This way, you can respond effectively to the increase in debt collection cases.
Why debt collection claims have increased to a record level
According to the Swedish Debt Collection Association, which keeps regular statistics on the number of debt collection cases in Sweden, debt collection claims have increased sharply in 2024. Calculated from January to July, the number of debt collection claims has increased by 7 percent compared to the same period last year. This is a large increase compared to what the level of debt collection cases usually looks like, according to Svensk Inkasso. Last year, around nine million new debt collection cases were received. If this year’s sharp increase continues, the number of debt collection cases in 2024 could exceed ten million for the first time ever.
Statistics from the Swedish Enforcement Authority also show that debts and payment demands are increasing in Sweden. In the first half of 2024, the number of applications for payment orders to the Swedish Enforcement Authority increased by 11 per cent compared to last year. In monetary terms, this is an increase in debt of 23 per cent.
Both Svensk Inkasso and the Swedish Enforcement Authority, as well as other financial actors, see the same reasons behind this rapid and large increase in debt collection demands. Above all, it is about increased living costs in the form of high interest rates, rents and other price increases. But it’s also because private customers are increasingly buying on credit.
When it comes to debt collection cases in B2B, we at Aptic have also seen an increase in our own surveys of customers who do not pay the invoice on time. Among other things, due to the uncertain economic climate in combination with a high debt burden already in the past.
Ineffective debt collection management can make an already strained situation worse
Debt collection is problematic for everyone involved – both in the short and long term. An unpaid invoice causes extra work, additional costs and possibly even cash flow problems for the supplier, as well as extra costs and even more financial strain for the customer. Debt collection often also damages the customer relationship, resulting in fewer future purchases.
Dealing with an unpaid invoice is an extensive process for a company. If the due date for the invoice passes, it must be followed up with one or more payment reminders with additional fees. If the invoice is not paid after the reminder, it becomes a debt collection case. Either by handing it over to a debt collection agency or by the supplier itself handling the collection claim. In this case, a collection fee is also added, which further increases the total amount. If the overdue invoice is still not paid, the holder of the debt collection case applies to the Swedish Enforcement Authority for a payment order. If the debt remains unpaid there, the debtor risks legal action, distraint and high costs. At the same time, the supplier faces lost revenue and an increased workload for the finance department, which needs to manage this complex and unplanned process.
The management of debt collection claims is already a problem that takes up time and resources for businesses. With the current surge in debt collection, this problem could get even worse. It will put an even greater burden on the finance department, increasing the risk of delays and mistakes in other invoice processing. Especially if it is done manually. This in turn can lead to even more invoices being paid late. For example, because they end up with the wrong recipient or contain errors (studies show that more than a third of all invoices are inaccurate), causing the recipient to put the invoice aside. If businesses are to avoid even more problems with late and unpaid invoices now that debt collection claims are on the rise, it is therefore important that invoices and debt collection cases are handled as efficiently as possible.
How to respond effectively to increasing debt collection demands
There is also a positive aspect to the reports on the increase in debt collection claims. According to Svensk Inkasso, the increase mainly concerns smaller amounts. 86 per cent of new debt collection cases involve amounts under SEK 5,000. Moreover, 76 per cent of these debts are paid within three months. If these cases are handled quickly and efficiently, it is possible to prevent them from escalating and ending up in a costly and demanding process for all parties.
The key to a more efficient and smoother debt collection process lies in automating workflows. Moving from manual handling of debt collection cases, i.e. invoice monitoring, reminders, follow-up and legal processes, to automating the processes and speeding up the flows makes everything more transparent. It makes it easier to monitor invoices and react quickly to late payments, and makes it possible to catch cases immediately before they escalate. In addition, a scalable debt collection solution can be adapted to an increased volume of cases so that the finance department is not caught off guard and has difficulty keeping up with both its regular work and the debt collection cases.
A centralised and automated way of handling invoices and debt collection requests also relieves the financial staff of their daily work. When manual work is reduced, employees can work more strategically and relationship-oriented with the collection process. Being able to talk about the problem and try to find solutions together with the customer is often what leads to the debt being paid and the customer relationship being both maintained and strengthened.
Consider this when automating your debt collection process
- A debt collection solution that automates the debt collection process needs to have the ability to handle all parts of the process. From monitoring late payments and reminders, to post-monitoring, follow-up and the collection management phase. The most efficient way to do this is to work with a solution that brings together all the company’s financial services, such as factoring, debt collection and leasing. This gives you more control over the process and makes it easier to prevent problems with late payments.
- When you can set up and adjust your flows for reminder management and other actions, create templates and customise the collection process yourself, it becomes easier to be more active with customers and their potential debts. This increases the chances of you getting paid. At the same time, you nurture the customer relationship so that the risk of future debt collection cases is reduced.
- A debt collection solution that can be integrated with other solutions, for example for invoicing, credit information and customer relations, gives you more opportunities to work efficiently and proactively with payments and debt collection.
- Choose a scalable debt collection solution that can grow with your business and adapt to your processes. It allows you to work efficiently even as you evolve and makes you better equipped for unexpected changes. For example, in the event of a sharp increase in debt collection demands.
- The Swedish debt collection system is regulated by several different laws and regulations. These include the Debt Collection Act (1974:182) and the General Data Protection Regulation (GDPR). It is important that the debt collection solution complies with these laws. Especially when it comes to GDPR and how personal data is handled in the debt collection process. Among other things, companies handling debt collection cases must inform debtors about what data is collected and how long it is stored, to protect personal privacy. The debt collection solution needs to be able to comply with these requirements.
At Aptic, we have developed the latest generation of customisable debt collection solutions that can support all your needs and processes, regardless of the nature of your business and your debt collection cases. This way, you can get paid faster and strengthen your customer relationships even when there are payment issues. Want to know more about how our invoice management and debt collection solutions can help you when debt collection demands increase? Contact us and we will help you!