What is Your Collections Process?
“What is your collections process?”
Over the last few months, I have been asked this question multiple times under various circumstances. And it bothers me.
When a company asks this question, it shows that they are still thinking about collections more conventionally. Asking after a process implies wanting a one-size-fits-all approach, and it indicates that many people still think of debt collection as a problem that one can solve with a single solution.
While this is a quick fix for companies with enormous volumes of debt, it may not be the most efficient one.
Back to the question, our answer is no - InDebted does not have a standard collections process. Instead, we know and believe that the industry needs a modernized approach to debt that emphasises on targeted strategies.
A modern collections process can be defined by personalized content, code-reliant compliance, and a real-time decision engine.
In PricewaterCoopers’ 2015 Forrester Consulting paper, 79% of survey respondents indicated that personalisation is crucial in achieving marketing and customer experience goals. This competitive advantage holds true in debt management processes too.
Personalized content can improve debtor engagement and debt recovery rates. Studies have shown that personalization increases email open rates by 26%. By providing consumers in debt a consistent, personalized communication stream, they are perceived and approached as people in need instead of delinquent debtors. This communication strategy will then encourage and nurture them to follow your recommended payment processes. However, personalization can only happen if you know your customers well enough. For this to happen, it is essential that companies understand and utilize big data in their operations to comprehend consumer behaviour.
Compliance risks for debt collection agencies can range from one-off fines to disastrous lawsuits that are damaging to businesses and reputations. In today’s climate, consumer laws and privacy principles are perpetually challenged and revised, and this can be a chore for management systems to keep up with changing compliance requirements.
The key to a modern and efficient collections approach is to have technology handle your compliance concerns. It is not uncommon for debt collection agencies to digitize specific functions such as training, speech analytics, and complaint management. In this case, technology can be an extremely reliable guard of business compliance. For instance, at InDebted, our compliance firewall enforces compliance at every single stage of a debt’s recovery process. A compliance firewall can only be installed if there is a centralized management system for all communications and cases. The coded compliance in our system keeps our operations risk free, and the code could be tweaked to reflect any updates on compliance laws. It is essential to embrace and stretch technology’s capabilities to maximize an operation’s potential.
Many perceive real-time decision making as a tool that can give businesses an edge in improving customer experiences. As the debt collection industry is one that has been ridden with bad press and negative impressions, real-time decisions could turn this around if they were well executed. Debtors can generally be categorised into those who won’t pay, and those who can’t pay. The circumstances that cause debtors to fall into either category are evidently varied and usually unfavourable. For this reason, a one-size-fits-all approach is not optimal for debt recovery. Instead, each debtor engagement should be case specific and handled with care if there is a desire to maximise recovery. With real-time data and analytics, collection agents who can make real-time decisions are more precise and effective.
It is evident that data is at the crux of modern collections. It is inevitable, as modern customers are a generation of people who are plugged in 24/7 with digitally-wired brains and behaviours. This is why we believe modern businesses, debt collection agencies alike, need data-driven targeted strategies, and not singularly defined solutions.