The management of debtors and account payments is often a laborious and reactive process that includes following up with debtors who are in default and don’t want to talk to you. Implementing a debt collections approach that is pro-active, could improve efficiencies and result in reduced amount of accounts rolling into delinquency.
Being pro-active is defined as creating or controlling a situation rather than just responding to it after it has happened. Doesn’t that sound appealing in a collections environment?
Here are the top ways to implement a pro-active debt collection approach in your collections division:
A critical success factor for collection operations is the ability to accurately predict month-end outcomes, but often forecasting is done in manually by comparing last month same time, last year same time, a combination of the two and taking seasonal variances into consideration. While using data is a good start, basic analysis is often unreliable and insufficient. It creates inter-month inaccuracies resulting in an inaccurate month-end expectation.
Using predictive analytics and machine learning methods, it is possible to forecast yields accurately, and predict which pro-active remedial actions will have a short or long term impact if you are not tracking to your targets. Use these pro-active insights to drive your collections strategy.
Utilisation of risk classification models
It is critically important to create and implement defined workout protocols that support rehabilitation and establishes an escalation trigger in early-stage collections. Ensure your collections and recovery strategy covers the ‘rehabilitation, repayment and recovery mantra’. Your process should be situational – based on the delinquency cycle and asset/product class. Rehabilitation endeavours should be explored and exhausted before the commencement of litigation.
The implementation of an analytically-based pre-delinquency strategy, will greatly reduce accounts rolling into default, negatively affecting a company’s debtors book.
Use innovative technology
With the inclusion of AI solutions like self-service bots, into operations, call centre agents can perform specialist duties like resolving default account queries, negotiating for optimal repayment arrangements, and educating debtors to become credit wise. Your collections strategy going forward should be looking to include both call centre agents and self-service bots, as this will ensure your low-risk debtors have a frictionless path to make payments or enquiries, which will result in your collection yields being higher than ever.
Coaching bots that walk your agents through the specialist calls with high-risk debtors in real-time will help your agents improve their performance. Bots can give your agents information about the debtor and can make suggestions on appropriate actions that is analytically based.
Lastly, it is of utmost importance for your core Collections Software to be a reliable and data-driven tool. You need a user-friendly system that enables the collections process to be highly structured, improving customer relationships and increasing collections effectiveness.
It has been shown that the first 3-5 seconds of a telephone call is the most crucial time in any conversation, and for that reason the agent should be empowered through technology to identify key aspects of the matter worked within a split second in order to maintain a good client relationship and subsequent outcome results.
Allowing your agents to build on previous relationships by accessing previous call data and information on the account in real-time, will build a relationship with your brand that is likely to ensure current and future payments are easier to secure.
Strive to provide this information by way of visualisation, as visualisation (pictures and colours) enhances memory function. According to research by Christopher Taibbi, a specialist in gifted education, one of the most reliable ways to help material enter the brain is through visualisation that targets and enforces the occipital lobe as the central point of processing the information.
Strategically assign collectors
Data analytics can predict the right time to call debtors that not only allows you to prioritise calls for better response rates, but also allows for better workforce management. You can have more call centre agents available when more people are likely to answer and redirect resources during off-peak periods. This reduces the amount of time that call centre agents will sit and work through a list of calls without connection success. Being strategic about when you call, will result in a pro-active increase in connection rates and yields.
If you’re looking for further ways to improve and optimise your collections yields, we recently released a guide on just that. You can download it by clicking below. Get in touch with us if you want to discuss any of our solutions for collections.
About the Author, Perry de Jager
Perry has been involved in Collections and Recoveries for the past 12 years, spending time in different market segments ranging from law firms to investment companies. At Principa, Perry has worked on extended projects within both South Africa and the Middle East with some of the largest financial organisation, providing on-site consulting within the collections and recoveries space covering strategy, process, people and technology.