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Freshen Up | Refresh your Collections Strategy

By Abby Progin 27 Apr 2017

For some of us spring cleaning can be felt almost instinctively with an obligatory sense of urgency to spruce and purge, cleanse and organize. This fresh start can create a sense of organization that prepares you to cruise through the upcoming summer months. A recharged approach to your collections strategy can also deliver the same level of preparation.

 

Historically, delinquencies are at an all-time low across the nation and collections practices are being outsourced less and less. This means that institutions who are collecting in-house are on a mission to give their collection activities a revamp to improve cash flow and help their bottom line. Top that off with strict enforcement of regulatory and compliance guidelines and many small to mid-sized financial institutions are asking themselves this question: How do we refresh our collections strategy to improve efficiency while remaining compliant?

 

The answer for each institution is different, but just like the right supplies and a little motivation can get your home spick and span so can proper technological and data gathering capabilities as applied to your financial institution.

 

In January, Transunion conducted a survey where  they questioned 635 collection professionals on the topic of right-party contact data and how it effects their collections strategy. While a wealth of information was gleamed from the survey I have summarized what I found to be of most value, as well as some industry topics I have observed through my work with financial institutions.

 

Accuracy of data

We all know that having accurate data greatly increases the chances of collecting on delinquent accounts. But what happens when time after time collectors are working with inaccurate data…you guessed it…they are wasting their time and lowering success rates of collecting on those delinquent dollars. In Figure 1, pulled from Transunion's study, you can see how much wasted time is spent simply trying to locate the right party. Spending extra time locating the duster takes away from productive action. Arming your collectors with accurate data at their disposal can greatly change your collections activities.

 

Figure 1

 

Source: Transunion, 2017 Insight Guide "The right-party contact driver's manual"

 

Partnering with the best-of-breed Collections Software

Promoting accurate data gathering and improving efficiencies in collections practices doesn’t just happen. It is likely that incorporating the right technology to support delinquency goals, provide accurate data and streamline collections efforts might be a necessity much like Pine-Sol is to clean kitchen floors.  In the Transunion study they highlight an important question to ask when looking for a technology partner: Does the system fit my business needs? Some of the value-add that technology can bring such as dialer integration, automated processing, increased visibility and understanding of the account holder relationship, to name just a few, have been found to push institutions beyond their collections expectations. As evident in Figure 2, below derived from the Transunion study, using the right technology can get you to the right-party contact faster and more efficiently. The study shows that 95% of the collectors questioned improved their right party contact with sophisticated technology, evidence that a new mop might get you cleaner floors.

 

Figure 2

 

Source: Transunion, 2017 Insight Guide "The right-party contact driver's manual"

 

In the same regard, getting to the right party quicker is easier when you are working with actionable data. Integrations to online databases and other skip tracing tools is a must have for the collectors of today's world.

 

Deliver the Right Information to the Right Person at the Right Time

While this topic was not specifically highlighted in the study from Transunion, I felt it important to add to the discussion. Having access to accurate data and the technologies of today won’t do collectors much good without the ability to organize and deliver this information appropriately. Being able to classify and queue account holders by priority, present actionable aggregated data and provide a streamlined step-by-step process for collection activities allows the collectors to leverage the information into actual dollars collected. Think a checklist for your spring cleaning duties.

 

While refreshing your collections strategy may seem like a daunting task, much like spring cleaning, it is one that will allow your financial institution to move into the warmer months with confidence.

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