Collection agencies need to adapt to an ever-changing industry full of new challenges and risks while maintaining compliance with federal and state regulations. Doing this can be a rather daunting task, especially when you don’t have the right tools for risk mitigation in collections. Luckily, data is the one key component that you need and have complete control over.
Comprehensive risk management strategies that include records scrubbing, identity verification, and keeping updated contact information can be achieved by leveraging available data. Private and public records databases can help you manage risks while increasing efficiency in your organization. Collection agencies can benefit from better debt recovery, thus boosting their bottom line.
Not sure how you can mitigate risks in your collection agencies using data? Here are the top three tips for risk mitigation in the collections industry:
Keep Up-to-date and Comprehensive Contact Information
The most integral component of collections is communication. You can only collect once you establish proper contact with the debtors in your collections cycle. However, most collection agencies find themselves using outdated or inaccurate contact information. The risk of contacting the wrong individual is, therefore, increased in such situations. The other risk is using a communication method that is forbidden by consumer privacy regulations.
To mitigate the above risks, you need to keep an updated and comprehensive contact information for each individual in your collections cycle. For example, a phone append can provide links to accurate individual contact information — including name, address, landlines, and cell phone numbers. Doing this will reduce the risk of contacting the wrong person, thus increasing your chances of collection. Right-party contact will also help you stay compliant with regulations.
Use Business Authentication and ID Verification for Risk Mitigation
Your agency probably handles multiple accounts within a single collections cycle. Therefore, it can be rather costly and time-consuming to pursue the wrong individual during your collection initiative. Sending the correct information to the wrong person is counter-productive and will only cost you more money.
Collection agencies work best when they can verify the identity of the person and account they are working with at a particular time. ID verification helps you with risk management by cross-checking multiple records to verify an individual’s identity. Collecting on business is also faster once you verify all their information — including the name, owners, address, and debts. Using Enformion’s data and solutions will help you determine the level of risk that a company or individual posses.
Scrubbing Deceased and Bankruptcy Records to Stay Compliant
Collection agencies usually waste a lot of time and resources chasing down accounts that they can’t legally collect on. In most instances, knowing the people you can’t collect on will help you stay compliant with federal and state laws. Did you know that you are liable to pay regulation or damages fees for trying to collect on uncollectible accounts?
Because situations are constantly shifting, collection agencies need to keep up with deceased and bankruptcy accounts. It is vital to take someone off your collection cycle when they pass away or file for bankruptcy. Scrub your records using private and public databases to ensure you stay compliant and save money in the long run. Ensure you use risk management tools when scrubbing records in private and public databases for easier and faster risk mitigation.
We are Here to Help
Securing the bottom line of your collections agency starts with proper risk management. At Enformion, we offer risk management process solutions — including records scrubbing, comprehensive contact information, and identity verification. Start your free trial today to safeguard your business and mitigate risks.