The industry has spent years treating income and expenditure assessments as a compliance exercise. But what if that thinking is costing creditors millions in missed collections?

I’ve heard a claim repeated across the debt collection industry that income and expenditure (I&E) assessments make little or no difference to collections outcomes.

And here’s the thing. I don’t entirely disagree.

But I think there are a few important words missing.

A poor-quality I&E makes little or no difference to collections outcomes.

And that’s a very different argument.

Somewhere along the way, parts of our industry started treating the I&E as something that simply needs to be completed. A regulatory requirement. A box to tick. A process to get through before agreeing a repayment arrangement.

And once you view an I&E that way, the commercial logic seems obvious.

Why spend more than you need to? Find the cheapest provider, collect the information, demonstrate compliance and move on.

Except that approach misses the fundamental point of an I&E.

The purpose isn’t simply to collect financial information. It’s to understand a customer’s true financial circumstances and establish an affordable, sustainable repayment arrangement.

And the quality of that understanding has a direct impact on the outcome.

Consider a customer who tells you their household expenditure is £1,000 a month.

A basic I&E might capture that figure, calculate disposable income and move on.

But what happens when you explore the detail?

In one real example, when we helped a customer break down their household expenditure into individual categories, the actual total came to just over £900.

That’s nearly £100 a month of additional disposable income that might otherwise have gone unidentified.

Not because the customer was deliberately providing inaccurate information, but because estimating expenditure and understanding exactly where your money goes are two very different things.

And sometimes the difference is much smaller.

An additional £10 a month might not sound transformational. But across a portfolio of tens of thousands of customers, £10 a month in additional sustainable repayments can represent millions of pounds in potential collections over time.

Small improvements in affordability accuracy can create substantial commercial value at scale.

Of course, the reverse is equally important.

A detailed, properly checked I&E may reveal that a customer can afford less than initially indicated.

That’s not a failure. That’s a better outcome.

Because an arrangement that looks good on day one but breaks down two months later isn’t good for the creditor or the customer.

There’s an assumption that increasing repayment values must come at the expense of sustainability.

Our experience suggests otherwise.

At Inicio AI, we’re now live with more than 20 clients across multiple sectors, consistently demonstrating the value of more detailed, intelligent affordability assessments.

For example:

• BPO Collections achieved a 60% increase in payment values alongside a 5% improvement in stick rate.

• A banking client achieved a 4% improvement in stick rate.

• Across our client base, we’re consistently seeing improvements in payment values.

These results matter because they challenge the assumption that an I&E has little bearing on collections performance.

The opportunity isn’t simply to get customers to pay more.

It’s to help customers understand what they can genuinely afford, so that where higher payments are appropriate, they’re also sustainable.

It’s a fair challenge.

Historically, collecting a detailed I&E could mean a lengthy conversation with an agent, significant operational cost and a risk that customers disengage before completing the process.

But technology has changed what’s possible.

Our conversational AI solution, Budgie, typically enables customers to complete a detailed affordability assessment in 10–15 minutes, with completion rates approaching 90%.

And importantly, this isn’t simply a digital form.

Budgie engages customers in a conversation, gathering detailed financial information, checking responses, identifying inconsistencies and appropriately challenging information where clarification is needed.

That distinction matters.

A short form might be quicker to build and cheaper to provide. But if it produces less accurate information, how much value is it really delivering?

There’s another benefit we don’t talk about enough.

For many people experiencing financial difficulty, completing a detailed I&E can be the first time they’ve properly understood their own finances.

Breaking down expenditure into individual categories can highlight spending patterns they hadn’t recognised.

Perhaps they’re spending more on takeaways than they realised. Perhaps they’ve underestimated essential household costs. Perhaps there are expenses they’ve simply forgotten.

The point isn’t to tell customers how to spend their money.

It’s to give them greater visibility and control over their finances.

That awareness can influence future behaviour, improve financial resilience and help customers maintain affordable repayment arrangements.

A good I&E doesn’t just measure affordability. It can help customers understand and manage it.

That’s a meaningful customer outcome, not just a collections benefit.

Here’s where I think the industry needs to fundamentally rethink its approach.

Too often, we evaluate I&E solutions based on their cost per assessment.

But surely the more important question is: what value does each assessment generate?

If a more effective I&E identifies just £10 a month in additional sustainable repayments, what does that mean across your portfolio?

And what is the value of fewer broken arrangements, fewer repeat contacts, less collections activity and reduced operational cost?

For our clients, the combined impact of improved payment values, better stick rates and operational efficiencies is delivering returns of 10x or more on their investment.

Suddenly, the price of completing the I&E looks like a rather small part of the equation.

We’re an FCA-authorised business, and we understand that affordability assessments must put fair customer outcomes at their heart.

But regulatory compliance and commercial performance aren’t competing objectives.

When affordability is assessed properly, they can reinforce each other.

It depends entirely on the quality of the I&E.

If you’re simply recording what a customer tells you, with little exploration, validation or challenge, then perhaps the sceptics have a point.

But if you’re gathering detailed information, helping customers understand their finances and establishing a more accurate picture of what they can sustainably afford, the evidence tells a very different story.

The question isn’t whether an I&E improves collections. It’s whether yours does.

Because a poor-quality I&E might satisfy a process. A high-quality I&E can transform an outcome.

And if you’re still buying I&Es on price alone, you might be saving pennies while leaving pounds uncollected.