It’s no secret that the market currently makes delinquent portfolios and non-performing loans (NPLs) more probable.
Risk mitigation is a must to combat rises in NPLs, increased regulation and general uncertainty. After all, the cost of risk is high. Elevated risk levels drag your portfolios further into delinquency, decrease your financial organization’s odds at recovering against assets on its books and increase your chance at bankruptcy.
As such, collectors cannot afford to make missteps that could drive their portfolios even closer toward unnecessary risk.
A key piece of collections technology called an early warning system (EWS) can help. It reduces the probability of customers moving into default and helps your team accurately assess your books before it’s too late.
What is an early warning system (EWS)?
An EWS is a system of rules that automatically flags accounts in danger of delinquency, such as those with histories of late or infrequent payments, by using:
An EWS allows your collections team to proactively prevent credit risk rather than simply react to it after it’s too late to address. This provides your team with the following immediate benefits:
The best part? An EWS could be readily accessible through your existing debt management software provider. This means you don’t need to build an EWS from scratch to quickly implement this type of technology. You simply have to invest in a solution that already has the features your business craves for better portfolio management.
Above all else, look for an EWS that promises fast implementation, ease of use and scalability. As you assess your options, be sure all team members, even those that struggle with technology, could adopt the solution without the need for extensive rounds of training.
Once these aspects of the solution are confirmed, look for the following core features:
When you adopt an EWS solution with the above features, you’ll be better prepared to recover more and default less from the start.
Specialized collections software is created by collections experts so you don't have to build solutions from scratch. Learn more about EWS essentials and the other collections software features you need to explore by downloading this free collections software purchasing guide.
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