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In today’s climate, prioritisation of collections strategies plays an integral part in controlling bad debt.
The challenge often comes from knowing who to prioritise and ensuring you are treating customers fairly in the process. For example, how frequently and through which channel should you contact customers who have fallen behind can be difficult balance to strike. Getting it wrong can potentially cause a negative experience for the customer, and for your recovery rates.
If you don’t have a deep understanding of your customer’s financial situation, simply calling them may not be sufficient enough for you to set up a sustainable repayment plan.
By incorporating economic, lifestyle and behavioural data alongside contact and financial information, you can get a complete picture of each individual’s circumstance to maximise the chances of collecting overdue debt and improving credit cash flow.
The outcome of every possible credit decision can’t necessarily be tailored to each and every customer, which makes it difficult. However, with deeper insight into your customers and the wider market, you can ensure that opportunities aren’t missed and the optimal solution is in place.
- Understand the market and your portfolio. Accessing market context against which your portfolio performance can be benchmarked, across a number of objectives from new lending through to collections and recoveries, can deliver a comprehensive review of the effectiveness of your strategies against your peers. Ensure you assess affordability as an on-going priority to pre-empt difficulties in payments. Having a thorough understanding of a customer’s affordability from the start of a relationship and throughout can highlight any concerns or challenges that may arise.
- Understand economic impact. Interest rate rises, changes in wages or trends in debt levels can all contribute to a customer’s ability to pay. Knowing what may happen, and when, can help you devise a forward thinking strategy that avoids the need to be reactive on such a large scale, enabling you to proactively approach situations.
- Develop models and understand an individual’s propensity to pay. Collections scorecards can support this process. For example, using scoring within collections may help to identify those customers who require less interaction, or contact, to prompt a payment. This can allow you to focus on those who may need further contact or support to bring their account up-to-date.
- Allocate your debt to the right Debt Collection Agency. Once the decision has been made to use an external agency to collect debt, significant benefits can be achieved by allocating each case to the most appropriate agency.
- Optimise collections strategies using a proven methodology. Maximise collections by selecting the most effective action for a customer in terms of treatment, channel and timing..
- Help your dialer work smarter, not harder. Significant increases in collections rates have been delivered through understanding the differences between the available actions – and adapting your dialling strategy accordingly.
- Analyse your collections strategy. Get relevant in-depth analysis of your collections performance by risk profile, to highlight strengths and opportunities to help improve your return on collections investment against a backdrop of increased demands on household incomes.