The close link between unpaid SOE debt and economic strength.
As State Owned Entities (SOE’s) continue to encounter financial burdens, outstanding public debt is a growing concern for government, however improving collections has become a significant part of the solution.
According to The Peter G Peterson Foundation (2018), “With a strong fiscal foundation, the nation will have increased access to capital, more resources for public and private investments in our future, improved consumer and business confidence, and a stronger safety net”.
However, failure to implement such systems and processes could result in the opposite effect. If these long-term concerns regarding economical imbalance are not rectified, the economy will be faced with an increase in economic challenges including:
Reduced Private Investments
Investors may doubt the government’s ability to repay debt and could demand even higher interest rates, further raising the cost of loans for businesses and households
Fewer Economic Opportunities
Rising long-term debt has a direct impact on income, and it’s reduction, as well as an increase in interest rates; resulting in lower tax collections and imbalanced government budgets.
Reduced Fiscal Flexibility
Increasing levels of debt would impact the government’s ability to actively respond to future crises such as wars, disasters, economic uncertainties and other unanticipated challenges.
Although the challenge of recovering debt is experienced within multiple government organisations, a qualitative research study that addressed these concerns, particularly within public hospitals, portrayed a greater outlook on just how important the management of effective debt collection is and how debt can negatively affect “the next person”.
Tshililo mentions, ”Each debt paid could make the treatment of the next patient possible. With medical costs rising, the increase in unpaid medical bills has put an unneeded pressure on health care providers, medical practitioners and hospitals”.
According to Tshililo Mudau (B.Sc Optometry) in his recent study [Debt collection within public hospitals], ”the collection of debt strategy that is being used in public hospitals is not effective.
There is no specific person designated to attend to debt collection in public hospitals, whereas private hospitals have a team of workers aligned to this function. As a result of that, the management of accounts receivables has not significantly improved.”
Fortunately, there has been a significant shift in focus that encourages SOE’s to view neglected debt management as a priority, as opposed to a back of office duty of internal employees; with alternate core missions.
By prioritising debt recovery, and successfully doing so, this will result in a significant increase in monetary resources that will not only improve the well-being of the public, but place our nation on a fiscal path of growth, opportunity and prosperity. The recovery of debt simply means that more money will be injected back into government organisations and therefore, more money will be available for government facilities and services such as: education, health care, transportation, environmental protection and unanticipated economic challenges.
As a leading provider within the debt collection industry, Blake Group has amassed a significant knowledge base of the best practices, using the latest technology and systems, to gather critical data that eliminates redundant activities and systems. Thus, centralising the debt collection process to help SOE’s evolve their collection functions in order to improve operations, Blake Collect achieves maximum results and minimise fiscal risk.
However, due to the notable lack of resources tasked with the sole purpose of collecting debt within SOE’s, Blake Group has dedicated a division of our business to address this; Sabenza Nawe.
Sebenza Nawe are specialists in the recovery of accounts, with specific regard to municipal debt, rates and taxes with all-encompassing services, covering all forms of collection from call centre collection to legal collection solutions.
With Blake Group as the parent company, they have established themselves as a highly respected leader in the BPO and contact centre industry. With roots in customer lifecycle management and consumer debt collection, over the years the business has grown to employ over 1400 staff across different sites in and outside of South Africa.
With dedicated trained professionals in strategy, risk governance, innovative technology, process and data management, IT and analytics, Sabenza Nawe does not only guarantee to recover the once perturbed overdue debt within Municipalities, National and Provincial Government Departments and State-Owned Enterprises (SOEs), but implement new systems to avoid it.