The costs of debt collection is high because of the time it takes to gather, install and maintain the infrastructure of a debt recovery system. Financial institutions also have to comply with regulatory and legal requirements that govern collection practices. To help make the process of collecting debts more efficient and effective, below are some of the top strategies to implement.
1. Update Management and Bank Debt Recovery Software
The first step to improving your debt collection efforts is to review the technology you use in your financial institution when interacting with customers. The tools need to help foster relationships that are positive when trying to collect money from them. Implementing ineffective systems can slow the process down.
2. Develop More Efficient Debt Collection Strategy
Portfolio intelligence mixed with advanced segmentation and scoring systems will help increase the amount of debt recovered. A financial institution’s collection strategies need to include the amount in full, the number of days late and payment options available. Keep in mind, reducing turnaround time will help employees save time for other cases to resolve.
3. Restructure Billing Date and Procedures Policies
All invoices need to be processed regularly and include multiple ways customers can pay their bills. Double-check that all invoices contain the right contact information to remit payment and keep records of all invoices and payments sent or received.
4. Keep Customers Happy
During the debt collection process, it is important to try and keep them from switching to a competitor. The key to successful debt recovery often lies in using friendlier approaches when communicating. Keeping the methods more friendly can improve the satisfaction of customers and retain their loyalty.
5. Track Experiences
Keep a record of communication experiences with customers who pay late. Knowing what encourages customers to pay their past-due bills can help banks retain an advantage in assessing the root of delinquency issues. Focus on the reasons why the customer is having issues paying their bills and offer alternative payment plans to help those going through financial hardships.
6. Finding Best Customer-Approach Channel
Customers respond to interactions with their banks regarding past due bills in a different manner. To stay ahead of the debt collecting efforts, create communication channels for customers so they may openly discuss their issues. Reaching customers as early as possible can help prevent bigger issues down the road.
7. Be Reasonable With Expectations
Agents working on debt collection efforts should create realistic expectations for their customers. Research has shown more than 70% of customers are retained when they are contacted before an account is charged off and offered easy payment options to choose from.
8. Create Specialists
Collecting debts can become more effective when people are given specialized tasks to complete. Collection efforts may suffer when all staff members are given multiple responsibilities each. Workforce utilization can be improved by finding ways to allocate job tasks more efficiently. Centralized and automated allocation can help financial institutions make more efficient use of their employees’ time.
9. Teach Debt Collection Representatives To Resolve Conflicts
It is important to help representatives find ways to quickly resolve conflicts to keep consumers happy. Be aware that a lot of online fraud takes the mask of debt collection in attempts to swindle elderly or take advantage of unsuspecting people. Be prepared for people to be on guard and protective when you call them. Look for factors that can help a debtor make their payments without making their financial situation worse. In some cases, representatives working for financial institutions need to act as negotiators and financial advisors for the benefit of their customers. This will require hiring staff with unique skills and experience.
10. Credit Loss Savings Relates To Improved Debt Collection Efforts
To improve your financial institution’s credit loss savings, a centralized application needs to be linked to your team’s performance. Efficiency in debt collection efforts will save the clients and institution money and time.
Byron Simpson is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance cent.