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Issue Date: September 2007

Outsourcing to recover bad debt

1 September 2007

Unacceptably high municipal debt in many areas of South Africa undermines service delivery. BPO outsourcing may help alleviate the situation.
Concern has been publicly expressed that many South African municipalities continue to battle debt and skills shortages. A national business process outsourcing strategy that leverages the expertise and systems of an external service provider to supply and manage an organisation's non-core functions would go a long way in solving this dilemma.
"South African municipalities are currently R28 billion in debt, a figure that the auditor general has attributed to poor financial management and a lack of proper processes," says Lior Woznica, financial director of VVM BPO. "A solid credit control and debt collection policy would be the first step in helping to alleviate this situation.
"Business process outsourcing providers are service-oriented, which means they are able to help customers transform their businesses by leveraging third-party expertise," he adds. "Why should municipalities attempt to set up internal credit management facilities when they can simply hand the job over to specialists? By doing so, municipalities can identify and focus on their key deliverables and their service to citizens."
Woznica says credit management and debt collection rely on strong back office processing capabilities and expertise in bulk data management and transaction volumes, coupled with a robust call centre."
In an effort to capitalise on this underserved market, debt collection and credit management firm Van de Venter Mojapelo (VVM) has joined forces with Total Call Centre Technology (TCT) Group to form VVM BPO, a business process outsourcing company focused on credit management in the public and private sector.
"VVM is a legal firm with over 17 years' experience in credit management," says Andrew Condon, commercial director of TCT Group. "As a result, it has powerful and robust back office processes. The company can deal with bulk data management and millions of transactions on a daily basis, which means it can provide call centre agents with immediate access to information when they are making debt collection calls on behalf of clients. The TCT Group, on the other hand, has a well established reputation in the call centre outsourcing market, and is also a recognised provider of call centre technology."
Karin van de Venter, CEO of VVM and VVM BPO, says the new company is poised to take advantage of the market's increasing confidence in BPO. "With more organisations ready to embrace the benefits of outsourcing, we are targeting the public sector in particular, which has a notoriously poor credit management history. By partnering with us, municipalities will be able to focus on service delivery while we clean up their bad debt."
Karin van de Venter, CEO of VVM and VVM BPO
Karin van de Venter, CEO of VVM and VVM BPO
One of the top advantages of BPO is that it provides access to proprietary workflow systems, process reengineering skills, and innovative staffing and delivery models, coupled with world-class technology delivered by experts in their fields. "We process over 50 million transactions a year, while TCT knows exactly what is involved in setting up a successful call centre that gets results," says Van de Venter.
BPO optimises business performance by reducing costs and increasing service quality. It helps companies to focus on their core areas and avoid unnecessary capital expenditure. It also provides quantifiable benefits through improved efficiencies, lower overheads, and reduced payroll and benefit expenses.
Condon says that municipalities that are considering outsourcing must first identify what processes are core to their business and retain control of them. Any non-core elements of the business can be outsourced. "Pick your BPO partner carefully," he notes. "It is critical to ensure that potential BPO partners are able to illustrate return on investment and the ability to get the job done. In other words, they must have a solid track record. The company you entrust with your business requirements must have the experience, tools and infrastructure to ensure that efficiency and quality are enhanced, and that customer satisfaction levels are improved."

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