4 tips for improving your collections strategy this tax season

By on January 23rd, 2020 in Industry Insights

The 2020 tax season is getting started early this year! The IRS will begin accepting returns for the 2019 tax year as soon as January 27th, but what does this mean for your business? According to the National Retail Federation, in 2018 and 2019, 34% of consumers intended to use their tax refund to pay off debts. With over $142 billion distributed through refunds last year, that leaves us with somewhere around $48 billion dollars directed toward debt payments across the country.

With numbers like that, it’s no surprise that tax season is to debt repayment rates what the winter holiday season is to massive retail sales. Let’s take a look at how you can make good on collecting while it’s on your customers’ minds this season!

Provide flexible payment options

US consumers have racked up over $4 trillion in debt, and that total has been steadily increasing for years. For many consumers, paying off a debt in full or even in the amounts offered can seem insurmountable. This is especially true of consumers that have multiple debts to pay off. 

With a surplus of tax return money burning a hole in their pockets, they have an opportunity to begin to relieve some of their debt pressure. By providing consumers with more flexible payment options, they feel comfortable knowing that they are taking steps toward financial well-being without having to commit their entire refund to a single payment.

In fact, we’ve seen that 60% of consumers that start on a payment plan will pay in full, settle in full, or remain active on that plan once they’ve started it! Getting your foot in the door can make all the difference.

Make yourself accessible

Being able to offer new payment options to consumers is one thing, but getting a hold of them to discuss those options is an entirely different challenge. Traditional collections agencies continue to work on a call and collect system, and they are reaching fewer and fewer consumers. As the number of consumers interested in answering their phones continues to decline, businesses have to consider new contact channels.

Effectively contacting consumers in debt starts with meeting them where they are: online. Your consumers are filing their W-2s, adding up their assets, and managing their incoming returns through tax software and banking apps. By reaching consumers by email, SMS, or even push notifications, you can introduce your payment plan options where they can see it without the pressure of a call from an agent.

Personalize (and humanize) your communication

Great payment options that consumers can afford? Check.

Reaching consumers when and where they are? Check.

Now how do you work to get consumers to follow through if you don’t have an agent on the phone? When a company is selling a product or service, there is a clear distinction between sales and branding. As you ramp up your tax time collection strategy, consider the impact of building trust in your brand rather than pressing consumers to pay right then and there. 

Even the most compelling payment options on the market and the most stellar team of collectors in the industry can’t solve for the fact that your customers may have other debts that they are making a priority. But if they recognize your brand as the one they can communicate with, as the team that understands their struggle, as the team that’s willing to work with them, they’re more likely to pay. Not only that, they’re more likely to work with you again in the future!

Partner with the right team

Many businesses, especially smaller businesses, take responsibility for collecting outstanding balances on their own, but collections is a complex industry from both a tactical and legal perspective. Compliance can be a massive, tangled hurdle for even the most diligent teams to clear. By finding the right debt collection agency to partner with, you can save you and your team the time and resources that would be invested in recovering lost revenue (and navigating the 538 new pages of the CFPB’s collections rules) and focus on what you do best.

Tax season is on its way, and customers want to clean up their debts as much as you want to recover on their delinquent accounts. Providing a compassionate and accessible collections strategy can offer great results for both your company and the consumers you serve, and if you need some back up, make sure you find the right agency for you.

Still looking for a new collection strategy for tax season 2020? You can reach out to our team to get started today!

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