Customer Debt Insights
INSIGHTS
Managing unprecedented debt in Energy & Utilities
Customer debt in the energy and utilities sector has reached unprecedented levels, intensifying pressure on both households and suppliers. While Ofgem and Ofwat continue to seek ways to ensure effective support for those in need, balancing fair customer treatment with strong financial performance remains a critical challenge.
At BFY, our team brings deep expertise in customer debt, honed through experience in collections and credit risk functions at leading suppliers. Our insights provide expert guidance and address key questions, including:
- How significant are the sector’s customer debt challenges, and what are the key trends?
- What practical actions should suppliers take to better support customers during this challenging period?
- How might increased regulatory focus shape the future of customer debt in the sector?
INSIGHTS
Customer Debt
Report: Ending Water Poverty by 2030 - Are current social tariffs working?
Our latest analysis suggests 25% of households in England and Wales could be in water poverty, yet support remains fragmented and inconsistent. In our full report, we explore the drivers of affordability pressures and present a considered case for a more consistent and effective national approach.
Using accountability and incentives to manage agents effectively
In part three of our Driving Agent Outcomes series, we look at what it takes to build a culture of ownership – from setting clearer expectations to using performance insight in a way that builds confidence. We share practical ways to embed higher standards and stronger accountability at scale.
Using data driven insight to enhance customer interactions
A lot of contact centres have the data, but not the leadership capability to turn it into action. In part two of our Driving Agent Outcomes series, we explore how simple, repeatable routines can help leaders use insight to drive behavioural change.
Transforming debt collection performance with frontline excellence
With customer debt at an all-time high and pressure on contact centres rising, upskilling agents for complex conversations is crucial to drive better outcomes, for your business and customers. In the first article of our four-part series, we share proven insights from our people transformation offering, helping one supplier to unlock £1m in cash within three months.
Energy debt reaches £4.15bn, an increase of £0.84bn in 12 months
Domestic energy debt has reached a new high of £4.15bn in Q1 2025, an increase of £0.84bn compared to Q1 last year. This marks the tenth consecutive quarter of rising domestic debt, growing by ~£300m in the last quarter alone.
Rethinking Fuel Poverty: Targeted Support, Tangible Impact
In March, we published a report with So Energy to better understand the true scale of fuel poverty in Great Britain, and what it’d take to meaningfully reduce it. In this article, we revisit the core insights from that report, look at what’s changed since, and explore what energy suppliers can do now to improve how they identify, engage and support customers who are struggling.
£3.85bn of reasons to address fuel poverty - and how
Fuel poverty is a bigger problem than ever before. Over 20% of households are affected, according to our research with So Energy. Historically high energy prices, inflation, distrust and wider financial challenges are confounding the issue. At a recent roundtable, we sat down with energy suppliers, consultants and debt charities to discuss the issue and potential solutions.
Are we ignoring a £1.8bn debt problem in business energy?
Energy suppliers and small businesses in the UK are at risk of a hidden crisis. A crisis of up to £1.8bn in unpaid energy bills. This huge debt problem is growing silently and secretly due to gaps in visibility compared to domestic debt. And there are no industry-wide answers — yet.
Domestic energy suppliers faced £1.5bn cash coverage deficit in Q4-24
Our latest analysis indicates that domestic suppliers faced a £1.5bn cash coverage deficit at the end of Q4-24. This marks the fourth consecutive quarter in which suppliers have had to finance a shortfall in net balances - a clear departure from historical trends and a stark indication of the ongoing challenges in maintaining capital adequacy.
Energy debt hits £3.85bn, but growth slows to lowest rate since 2022
Domestic energy debt hit a record £3.85bn in Q4 2024, rising by £0.75bn over the past year. Although a seasonal increase from Q3 to Q4 is expected due to winter consumption, the latest rise of £30m was the smallest quarterly jump since 2022, indicating a potential shift in the crisis.
How to solve a problem like fuel poverty
Following the launch of our fuel poverty report in Parliament earlier this month, David Watson explored our key findings in a recent article with Utility Week.
Households spent £110m more on bills this winter, despite lower Price Caps
Households spent £110m more on their energy bills this winter, despite lower Price Caps. Analysis from John de Bono shows that while energy Price Caps were ~10% lower, many households still saw higher heating costs due to colder weather and cuts to government support.
Customer Debt
Meet the Team
Rachel Littlewood
Director
Rachel leads our operational and financial turnaround engagements, helping to solve complex operational challenges while maximising commercial performance and customer outcomes.
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Kevin Scott
Director
Kevin leads client engagements with a laser focus on empowering clients to navigate large-scale events and market challenges.
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Kev Brown
Senior Manager
Kev leads continuous improvement and lean transformation projects with our clients, supporting customer operations to deliver our Leadership and People Excellence programme.
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Jonathan Paton
Senior Manager
Jon specialises in Customer Operations leadership, customer contact, and operational service delivery transformation/improvement.
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Jon Vincent
Client Director
Jon helps clients resolve problems with billing, settlements, and customer service.
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Joseph Cooper
Manager
Joseph supports our Retail clients to improve their operational processes and business performance.
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Our Impact
Unlocking ~£5m in stranded B2B debt for energy supplier
Through a targeted review of debt processes and escalation pathways, we identified a ~£5m recovery opportunity for a B2B energy supplier. By segmenting a ~£20m debt book, improving workflow ownership, and introducing new performance KPIs, we enabled our client to take clearer, faster action on aged and previously inaccessible debt.
Identifying ~£50m BDC reduction opportunities for energy retailer
Through our debt maturity assessment, combined with a broader focus on billing and customer contact activity, we identified routes to achieve a ~£50m BDC reduction for an energy retailer. This informed a targeted improvement programme to address capital adequacy challenges, driven by rising debt and BDC.
Cash recovery initiatives deliver ~£275m benefit for large Energy supplier
Our debt team supported a large Energy supplier with recovering their cash position, achieving a total benefit of ~£275m through collaborative initiatives.
£4.5m in Bad Debt benefits for large energy retailer
We helped a large energy retailer to generate immediate in-year debt benefits through tactical interventions. Our programme delivered ~£4.5m in Bad Debt benefit and ~£8.5m in cash collection, all while maintaining customer and productivity measures within the operation.
Collections improvements deliver ~£5m cash for Water retailer
We supported a B2B Water retailer with a series of collections improvements, achieving a cash uplift of ~£5m in five months.
Tactical debt improvements deliver ~£7m cash for large Energy retailer
A large Energy retailer was facing significant challenges with customer debt, requiring improvements to their collections processes to mitigate this. Their total debt was ~£100m at the time of engaging BFY, with communication gaps present across the customer debt journey.
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