Every 21st Century Debt Collection Service Must Include These Three Features

By on November 10th, 2015 in Industry Insights

What do collection vendor managers look for in a new collection service? A vendor manager often receives 3-5 pitches a week from new collection services. As it stands, onboarding a new service is difficult due to regulatory compliance while promises of better performance abound. Still, returns are often weak. Currently, technology is limited in the collections space, so the best thing a vendor manager can do is place accounts with a service for 4-6 months; inferring collection rates from monthly remittance reports.

This dynamic no longer makes sense. Technological progress means that debt collection can be a controlled and data-driven process. Being a modern collection service means using more sophisticated tools for better results. Now vendor managers can demand more of the next service that pitches them for their collections portfolio.

Three features to look for in any new collection service:

  • Flexibility. Vendor managers usually receive “all or nothing” pitches, with agencies gunning for their entire primary or secondary placement. There is now more data for segmentation and sophistication; while managers are realizing that some agencies service certain segments better than others. Debt collection services must provide versatile programs that treat different debts differently. At TrueAccord, we use our data-driven platform to offer programs that vary from early stage, skim-off-the-top programs to long-duration, long-tail collections for underserved segments. Collections is no longer “one size fits all”.
  • Compliance. Call center based collections pose a growing compliance challenge for risk-aware vendor managers. From the latest FCC ruling to the growing complexity of legal disclosures, every phone call is a regulatory ticking time bomb. It is almost impossible to track the content of a phone call in hindsight; controlling quality (and compliance) in real time is virtually impossible. Utilizing sophisticated technology means providing better controls and better auditability for creditors and reducing phone calls in favor of better controlled digital methods. At TrueAccord, running a data-driven platform with much less human interaction than a traditional agency means code controlled compliance, pre-approved content and incredible auditability.
  • Feedback loop. Vendor managers are used to very little feedback from their agencies, other than monthly remittance reports and the occasional calibration meeting. Modern platforms are changing this trend, providing more quantitative data about communication frequency and type, customer responses and even qualitative insights. Leaving clients in the dark isn’t considered good practice and managers are becoming more sophisticated in learning how to use their vendors’ toolbox to improve recovery. Collection services must learn to communicate with clear KPIs, funnel breakdowns, drop off rates and operational metrics. At TrueAccord, we offer a dashboard that updates multiple times per day with up-to-date payment information, account status, activity metrics and more. Our internet-based collection platform creates a wealth of data, significantly beyond a call-based collections operation. It’s a dashboard creditors enjoy using to inform internal operations and prioritization decisions.

We’ve taken time before to point out that debt collection should adjust itself to the 21st century. As vendor managers notice advancements in other financial technology segments, we’ll see a growing demand for more sophistication and better tools in the collections’ process. Soon, the features we’ve mentioned will be a prerequisite for getting creditors’ business. Best practices will always lead to better results!