Debt recovery is a serious concern among debt collectors and companies. In addition to the laws and restrictions on debt collections, many collectors lack the right processes and tools to manage accounts and minimize Days Sales Outstanding.
This article will highlight five ways to improve debt collections to help you get the most out of your collection effort.
Skip tracing can locate a debtor who fails to answer or return repeated emails or calls. When a debtor vanishes into thin air, they leave you with no way of informing them about the debt and providing a chance to pay it off.
Debt collections tools can track the individual’s credit reports, utility bills, courthouse records, job applications, loan applications, criminal background checks, and public records databases. If none of these resources provide valuable data, the tool can also link people and identify coworkers, relatives, friends, landlords, and neighbors. These people can provide relevant information about the debtor, including current location, state, employment, and whereabouts.
In addition to skip tracing, debt collections software can reveal right-party contact, workplace records, assets, bankruptcy records, judgments, tax liens, and other information. You can even use it to run identity verification.
The Bureau of Consumer Financial Protection received approximately 75,200 debt collection complaints in 2019. But 45% of these complaints were attempts to collect debt not owed. A majority of customers who filed complaints were identity theft victims.
An error in the customer’s profile validation or failing to monitor a customer between loan sanctions and recovery period could result in right-party contact issues. Having updated customer data is critical to debt collections.
Depending on the loan type, repayment date, amount owed, location, and occupation parameters, debt collections customers can be grouped into loan buckets. Segmentation helps to prioritize cases. You can then organize this data into debt collection software.
It’s easy to prioritize cases closer to Days Past Due (DPD). But doing so manually can take up a lot of time and also lead to errors. A debt collection tool can assign priority to accounts based on customer’s profile data, including DPD, due amount, asset classification, delinquency bucket classification, product type, fraud identification, and willful defaulter.
Then, the software can allocate an account to an in-house team, call center, third-party, or field agent. It can also remind agents to follow up with debtors, ensuring timely communication.
Document everything you discuss with the customer about the outstanding debts. This includes their comments, commitments, or complaints. If you’re using tracking software, record your communication for future use. Keep adding more details to keep the file as updated as possible. You can then use this data the next time you contact them. For example, if the customer said they’d settle the whole amount in two weeks, and they haven’t, you may use this information as a reference.
It’s easy to lose it when dealing with a difficult or elusive customer, but that will only worsen the situation. Start your conversations with a friendly, non-confrontational tone to encourage the customer to respond positively. Be pleasant－find out if you can help in any way or if they need more information. The goal is to show the customer you care about their side of the story – but are not attached to the situation. If the customer is having a hard time offsetting the debt but they’re willing to make payments over time, you may want to work out a debt collection plan that suits both parties. Pay attention to what the customer says and provide options until the two of you define something workable. And if the debtor becomes abusive, suggest calling back later.
At Enformion, we give you the tools you need to manage your agency’s debt collections attempts more easily. Our tools can help with right-party contact, skip tracing borrowers, scrubbing collectible records, receivable management, and repossession. Contact us today to learn more about our debt collection tools.