Top Tips for Lenders to Reduce Arrears Going Into January

January is notoriously one of the most challenging months for lenders in South Africa. After the festive season, many borrowers face tight budgets, increased household expenses, school fees, and delayed pay cycles. As a result, arrears and late repayments often spike in the first quarter of the year, impacting lender portfolios and cash flow.

For lenders, preparing ahead is key. With the right strategies, technology, and customer engagement, you can minimise arrears while maintaining strong customer relationships. Here are ACPAS' top tips for lenders going into January.

1. Identify High-Risk Borrowers Early

Proactive monitoring is the first step in reducing arrears. Look at historical patterns, including:

Borrowers who missed payments in previous January’s
Customers with multiple loans or high debt-to-income ratios
Clients with late payment trends over the past 3–6 months

Actionable Tip: Use your loan management system (LMS) to generate a risk report before the festive season ends. This helps prioritise outreach and intervention.

2. Communicate Proactively Before the Holidays

Effective communication can prevent arrears before they happen. Send timely reminders and educational messages about:

Upcoming repayments
Managing budgets during the festive season
Options for flexible repayment plans

Actionable Tip: Send SMS, WhatsApp, or email reminders in late November and early December to ensure borrowers are aware of upcoming obligations.

3. Offer Flexible Repayment Options

Rigid repayment schedules can increase the likelihood of missed payments after high-expense periods. Consider:

Adjusting repayment dates to align with borrower pay cycles
Offering short-term deferments or payment holidays
Providing top-up or consolidation options to simplify payments

Actionable Tip: Ensure your LMS supports flexible scheduling and automated adjustments.

4. Strengthen Early-Warning Monitoring

Early detection of potential arrears allows lenders to act before accounts become delinquent. Monitor:

Missed instalments or partial payments
Declining income trends or changes in financial behaviour
Multiple short-term loan applications

Actionable Tip: Use automated dashboards to flag at-risk borrowers in real time.

5. Educate Borrowers on Financial Discipline

Many arrears result from seasonal overspending or lack of budgeting. Simple financial education can make a big difference:

Provide tips for managing January expenses
Encourage saving from December bonuses
Promote responsible borrowing habits

Actionable Tip: Share quick guides or SMS tips to reinforce good habits.

6. Automate Arrears Management Workflows

Manual tracking of arrears is time-consuming and error-prone, especially during peak periods. Automation helps you:

Send automated reminders
Track partial or missed payments
Trigger escalations for collections
Generate reports for risk management and compliance

Actionable Tip: ACPAS LMS allows lenders to automate these workflows, reducing human error and improving portfolio performance.

7. Review and Adjust Credit Policies Temporarily

The festive and January period is not a “business-as-usual” timeframe. Review your credit policies to:

Adjust lending limits or approvals for high-risk borrowers
Strengthen affordability assessments before December
Monitor new loan approvals more closely

Actionable Tip: Temporary tighter controls can prevent over-indebtedness while still serving low-risk borrowers effectively.

8. Engage Your Collections Team Early

Ensure that collections teams are prepared for January arrears:

Schedule proactive follow-ups
Use analytics to prioritise high-risk accounts
Provide staff with scripts and strategies for customer-friendly engagement

Actionable Tip: Combining human engagement with automated alerts increases recovery success rates.
The festive season and early January create unique challenges for lenders, but with foresight, preparation, and the right tools, arrears can be significantly reduced. By combining proactive communication, flexible repayment options, automated workflows, and data-driven risk monitoring, lenders can protect portfolios and support borrowers during financially sensitive periods.

How ACPAS Helps Lenders Stay Protected

ACPAS provides lenders with advanced loan management software and risk monitoring tools, making it easier to reduce arrears, maintain compliance, and ensure smooth operations even during the busiest months.

Contact ACPAS today to find out more about our LMS and how we can keep you safe and jolly this festive season.

Top Tips for Lenders to Reduce Arrears Going Into January