By identifying customers who are at risk of defaulting before the worst happens, you can take measures to help them meet their obligations and avoid entering the collections process.
Understanding which customers are likely to miss payments in the near future requires in-depth analysis of customer and market data. By harnessing all available data about your customers and their financial profile, you can gain a clearer view of those who are at risk of struggling to keep up with their payments.
A number of potential solutions could be offered to those identified as struggling, ranging from a short payment holiday, to a review of payment terms and conditions. Taking this action early can help keep vulnerable customers out of the collections process.
An effective collections prevention strategy can therefore benefit both your customers and your organisation, while keeping behaviours in line with regulatory requirements for fairness, transparency and proportionality.
Steps to building a strong collections prevention strategy
1. Identify customers at risk of defaulting
Deploy data analytics tools that help you segment customers and identify those who are likely to default within 30, 60 or 90 days.
2. Identify and track risks
Identify the accounts where customers are struggling and therefore could present financial risks to the business, and take immediate action.
3. Support customers in urgent need
By offering them financial solutions that prevent them from defaulting, ensuring you look after the customer while reducing collection costs and other risks.
4. Maximise customer relationships
Offer customers appropriate financial solutions that help them through hard times, reducing their likeliness to change organisation, improving loyalty and maximising the value of your relationship with them.
Why not download our recent collections whitepaper, addressing the top five challenges facing collections professionals today? Each challenge is coupled with a practical step-by-step guide to help you to optimise your collections strategy and deliver the best customer experience possible – for example see my previous blog about protecting your customers with affordable repayment plans.
To find out how our debt management products and consultancy services could help you to improve the customer experience while maximising business outcomes, please contact our collections team on 0844 481 5872 or email firstname.lastname@example.org