The 6 key phases of debt collection: Do your operations stack up?
Understanding whether or not your processes for collections are being maximised can sometimes feel like a minefield. With customer technology changing at the speed of light, so too are customer motivations, decision making processes, expectations and payment habits.
Gone are the days of traditional collections, we now have multiple channels to communicate with and receive payments on (both real-world and digitally), and it’s up to collections teams to constantly measure whether or not their systems are up to date and even relevant to the market.
We understand the issues these constantly changing goal posts can raise for collections teams, so we reviewed over a thousand of our clients (and over 2 million live accounts), diving headfirst into the data to develop a common timeline from across multiple industry sectors for you to compare your own against.
Our findings suggest collections management is faced with several big considerations, from how to communicate, what channel, the tone of voice through to whether or not they want the cost of chasing debt themselves (part or all) or outsourcing it to a specialist debt recovery agency/s (DCA) like ourselves.
Often that decision comes down to the fixed cost of expanding a finance department’s collections team, leading to extra costs such as wages, software and programming as well as sourcing talent, expertise, management and more.
For most the realisation hits that it just makes better financial sense to outsource to a specialist, who is already set-up to execute on your brand’s behalf and boost your collections returns.
Over the course of the next 6 weeks we’ll be breaking down our Collections Timelines: The 6 Key Phases Whitepaper into the six major phases of the collections process and dedicating a blog post to each of the following phases:
Can’t wait? For the full Collections Timelines: The 6 Key Phases Whitepaper
We’ll be sharing what activities are undertaken, when they are executed and what’s involved (averages are taken from across 5 major industry sectors).
With DCAs playing an integral role in the success of a collections programme, in our first post we start with phase 1 and explaining what to look for from a DCA when Setting up for Success.
Setting up for Success
Can you truly say your collections team is prepared for all eventualities?
Even if you have an outstanding collections team internally there may come a time where you need to outsource your work due to exceptional circumstances, such as the volume becomes too much for your team, the value of the debt is too little or big and/or needs specialist support or the risk involved leaves you unsure of the returns.
So, it’s important to identify a talented DCA that you can look to build a strong long-term relationship with that can quickly ‘turn on the tap’ when it’s needed most.
DCA’s come in many shapes and sizes but we believe there are 6 critical questions they must answer for you to get the best return on your investment. You can use these questions to decide if they are the right fit for your organisation and your customers:
In our experience these six questions are the main point of focus from the thousands of clients we’ve had over the years and you’ll want to be satisfied how your DCA answers these questions fits with your business direction and your brand values.
Of course, in any partnership it will always be about the relationships with the people involved but using these six questions and their answers will help you build these crucial partnerships on strong foundations.
Final words from coeo
Thank you for taking the time to read through this post. Stay tuned next week as we launch into the second phase of the collections process: the ‘Pre-Due’ phase. We’ll see you next week!