There is little doubt that the introduction of Universal Credit is one of the biggest threats this decade to a housing provider’s income. The change to benefits being paid to tenants, and the new responsibility for housing providers to collect the credit allocated for rent, is one that few providers are equipped to tackle.
Many people have likened the change to a ticking bomb and certainly left to take its toll, Universal Credit will cause havoc. However, if it is dealt with correctly, the introduction of Universal Credit is much more straightforward to deal with than the hysteria would suggest.
At an operational level, I would expect that most organisations will be well underway in solving the transactional challenges. However, I would like to pose the question: how do we ensure we effectively monitor our arrears in future?
What do we need to be measuring?
Information insight will empower housing providers to maximise the total income they generate while mitigating the risks of lost income through arrears. While each organisation might need to measure different things, there is a number of core metrics that will be common in analysing arrears and income performance.
For all of these measures, it will be vital to be able to compare trends over time and slice the data by areas such as geography, division and tenancy type to find the critical causes to be addressed. Five examples of the core arrears measures are:
- Total rent in arrears;
- Arrears as a percentage of debts;
- Percentage of arrears due to outstanding benefit;
- Arrears collected by payment method;
- Method of arrears escalation.
These measures are the high-level executive KPIs that should form the backbone of an arrears dashboard. Through them an organisation can understand the arrears trend and forecast, the reasons behind the arrears and which methods are effective in dealing with poor performance. Beneath these executive KPIs there should be a hierarchy of supporting metrics, responsibility for which will be cascaded down through the organisation.
A series of secondary executive KPIs which will ensure success following the implementation of Universal Credit break down into two categories – rental incomes and void loss performance, and maximising rental income potential.
How do we dive down into the numbers?
Alongside what we need to be measuring, who needs to see what information and the format of that information are also critical. The executive KPI dashboard described above delivers the ’40,000 foot’ view of performance but the information communities’ needs change as we go down the organisation hierarchy through senior and middle management, operational staff, contractors and analysts.
For each of these communities, specific reporting outputs and the granularity of detail need to be tailored to support their individual roles. Functionalities such as alerting via email or text message, ad-hoc query capabilities, predictive analytics and mobile report distribution need to be added to ensure all users have access to the right information.
As part of a best-practice scoping exercise, the requirements of these communities need to be understood and built into the solution blueprint. Responsibility for the reports and KPIs they will monitor need to be allocated as part of the cultural change process to ensure everyone takes responsibility for performance success.
So what technology do I need to measure arrears performance?
Clearly a reporting toolset capable of delivering all the aforementioned functionality is a given. Whether it’s BusinessObjects, Cognos, Oracle or Microsoft, functionality and fitness for purpose must be the key deciding factors, weighed against cost and current investments.
The toolset selected must also be able to grow and adapt to cope with changing business conditions, whether that’s a shift in the KPIs being measured, the inclusion of new users, greater demand for functionality or a merger with another housing provider.
Under the reporting toolset is the data warehouse, the repository in which all the key information for reporting is integrated and stored for time-based analysis. As the data required for effective arrears reporting is typically stored in multiple applications (predominantly the housing management and finance applications), this data will need to be extracted, cleaned, integrated and stored long-term for time-based analysis, and a data warehouse is the most cost-effective and robust solution for doing so.
Over time the data warehouse can be scaled to provide the single source for all reporting, with responsive repairs, planned maintenance or leasehold management data being introduced, and the reporting toolset scaled to service those communities.
How should I implement a solution?
The most important thing to remember is that no organisations are the same; operational applications, reporting measures and KPIs, terminology and data definitions, and functional and user requirements will vary considerably. A solution aligned to an organisation’s unique requirements will deliver far more value than one which is prescriptive in structure and supposedly designed to service all organisations. A detailed scoping exercise to reveal the organisation’s exact needs, and an implementation, training and roll-out plan in partnership with a trusted advisor will ensure cost-controlled success and mitigate the obvious risks.
So I shouldn’t fear Universal Credit?
Whatever the approach used to deliver effective insight into arrears performance, the problem of analysing service delivery incomes is common across many sectors. Universal Credit should not be feared; there is an opportunity to prepare and implement effective solutions to ensure control of arrears and rental incomes well in advance. The answer is to be proactive now, and mitigate the future risks long before they happen.
Tom Hughes is responsible for business development and alliances at Visualmetrics.