The debt collections and recovery industry is one of today’s most vital and fast-paced business segments. Unfortunately, many collections businesses still employ traditional practices like cold calling, while attempting to compete in an increasingly complex world.
Outmoded practices and disparate systems hinder profitability and efficiency. Centralizing key operations can help your collections business:
To realize high levels of performance, many businesses are centralizing key operations by scaling and standardizing processes such as their authority, workflow systems and communications output.
No matter the organization’s size, a centralized authority enables all directives and management decisions to come from a single source. Establishing a clear chain of command brings heightened clarity and focus across the organization. It also enables better cost control and an enhanced ability to forecast personnel hours, profits and financial liabilities.
Optimally, all staff should be committed to full-time collections functions, not a range of duties that are partially owned by other departments. Whether that authority is a single collections department head, a team with clear authority, or an entire collections department, it must be one central body from which information is disseminated.
In addition to assigning a central authority, consider also:
Centralizing the main authority is important in not only ensuring efficiency and consistency but also in maintaining compliance for collections outfits that must adhere to legal requirements and regulations.
Once a central authority is established, focus on centralizing processes and workflow. Anyone involved in collections knows daily operations can become chaotic, as large amounts of data and documents are generated throughout each phase of the collections process.
Methods such as spreadsheets, disparate file management systems and outdated banking systems complicate information accessibility.
That’s why savvy collections firms employ specialized debt collections software to store all documents, data and related insights in one place. No matter how diverse your client base, debt collection software can help you manage credit risk along the entire lifecycle of accounts, from the moment of disbursement to write-off or debt sale. It performs a range of functions, including:
Moreover, debt collection solutions make possible a customer-centric approach that improves performance and preserves customer relationships by helping you understand when the time is right to contact customers and what approach to use for optimal collections success.
Communications is a vitally important segment of operations to centralize. Customers have evolved, and collectors must communicate with them differently than in the past.
To begin with, customers today are more complex. Modern debtors usually have several obligations with multiple lenders. They might not have a landline or even a physical mailing address. And, they’re turned off by interruptive communication, preferring to choose which conversations they have over which channels (and these channels are often digital).
Therefore, it’s important to coordinate your efforts across each channel customers prefer, such as:
Reaching out to customers over their preferred channels offers a more collaborative approach to collections. As a result, it helps collections professionals earn customer trust, cooperation and, ultimately, a desirable settlement outcome.
In addition to knowing how to reach your customers, knowing what to say to them is vital. To ensure your team is communicating as effectively—and consistently—as possible, consider training staff using centralized scripts and communication checklists.
Too often, collections communication is not only rife with jargon, it completely disregards the customer’s needs, focusing instead on the lending agency. This disconnect can be a result of messaging that’s developed by corporate leaders far removed from day-to-day operations, rather than the teams actually doing the communicating.
What’s interesting is that only 21 per cent of businesses say their organizations communicate simply and clearly. On the other hand, 71 per cent of high-performing companies say they think specifically about their audience’s perspective when communicating. With high-performing companies, communication is likely to be simple and clear, with two-way channels built in to better engage the customer.
Transitioning from outdated processes is not accomplished overnight. But the benefits of centralizing your collections operation’s authority, workflow systems and communications outreach become increasingly apparent as you scale and standardize these vital segments of your business.
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