4 reasons companies worry about digital debt collection

By on March 26th, 2020 in Industry Insights

Committing to work with a collections agency can help to reduce the strain of losses on your business. Whether you’re an eCommerce platform with mounting chargebacks, a small lender, or a rapidly growing bank, working with the right collection agency can reshape how you manage delinquent payments. 

Some digital debt collection options also offer self-service products or platforms that allow companies to manage their collections efforts with an internal team supported by powerful, digital tools while other digital companies offer full-service collections.

No matter how you (or your collection agency partner) choose to collect, there are pros and cons to different approaches, and the newness of digital debt collection can create some cause for concern. It’s important to be informed and understand how digital debt collection can help you and actually directly combats many of the risks associated with collections.

“There’s a compliance risk”

Debt collection is a tightly regulated industry and in order to collect debts safely, companies have to conduct extensive training and build processes that adhere to those regulations. This includes federal laws like the Fair Debt Collection Practices Act (FDCPA), the Telephone Consumer Protection Act (TCPA), and any legislation passed through the Consumer Financial Protection Bureau regarding collections practices. Regulations on collections also vary broadly at the state-level. 

With all of these regulations in mind, companies that are beginning their debt collection efforts may be wary of investing in an extensive, internal infrastructure and will instead partner with established third-party debt collection agencies. Several digital debt collection platforms and tools have built-in compliance measures, but they still require internal teams to manage. With the proper systems in place, however, they can be used to great effect as they are coded to align with legal compliance measures. 

TrueAccord’s legal leadership team has been in the industry for decades. You can check out some of our legal advocacy work here and here!

Full-scale digital debt collection agencies take this a step further and are able to provide comprehensive debt collection services with built-compliance software alongside technology experts that manage the product for you. With measurable digital channels taking priority over agent calls, compliance fixes are integrated into every communication, no training required.

“This will impact how we talk to consumers”

Traditional collections agencies are driven by a call-to-collect model of business that leans on agents calling consumers. The collections industry has remained largely unchanged in its practices for decades, but consumer preferences have shifted. It’s becoming increasingly difficult to reach consumers over the phone; in fact, in the State of Collection 2019 report, one industry leader included in the survey said that “right-party contact has fallen off a cliff.” 

Transitioning to digital debt collection from traditional models is easier than you might think. Want to learn more about how easy it can be? Get in touch with us.

In order to meet the growing demand for convenient communication methods, digital debt collection strategies are redefining the industry’s approach to connecting with consumers in debt. While this digital transition will have a lasting impact on the collections industry, companies looking to start or change their collections strategy have the opportunity to work with partners that are embracing the change. 

“Setting up new technology takes time”

Implementing new processes always takes time. Using a traditional call-to-collection agency still requires building a business partnership and sharing debt portfolios for agents to begin working accounts. In the digital debt collection world, implementation can begin quickly and is made easier by uploading CSV files of contact information directly to the online platforms and applications.

Using internal digital tools can also cause delays due to the need for introducing agents and other team members to the system and allocating training time and resources to building infrastructure. Full-service digital-first collections agencies are able to merge the simplicity of starting with a digital strategy with the value of a dedicated team built specifically to manage these new processes. 

“We aren’t ready to bring on a new tool or partner right now”

Timing can be a blocker for any number of company decisions. Collections and recovery may be a year-round function, but teams still see a seasonal ebb and flow in payment rates. Trying to adopt a completely new strategy in the middle of a busy tax season, for example, can feel like a gamble. Or maybe you’re in the middle of a major acquisition or change in leadership and the business’ future is uncertain.

Even in times of change, it’s important to understand that digital collections tools perform better over time than traditional collections agencies. By beginning your digital approach sooner, even with a small subset of accounts, you can begin to compare digital efforts directly to other collections partners.

Comparing digital-first agencies and tools directly to traditional competitors on the market helps to illustrate the power of digital infrastructure on contact rates. The sooner you start, the sooner you can ramp up, and the sooner you can collect. 

Digital debt collection may be new, but that newness only serves to improve existing systems. Companies that depend on traditional collections efforts can see substantial growth in outreach using digital channels, and those that are not yet collecting have more opportunities to get started now than ever before. Future-proof your company’s losses, improve recovery rates, and keep your customers happy all at the same time. 

Connect with our team today to learn more about how digital debt collection is changing the industry for the better.

How do you effectively contact consumers in debt?

By on January 14th, 2020 in User Experience

According to the State of Collection 2019 report published by TransUnion and the Aite Group, “the challenge at the top of thought leaders’ minds [is] the increasing difficulty of connecting with consumers in a world where robocalls and scams run rampant.”

Consumers today are less and less likely to answer a call from a phone number that they do not recognize (only about 47% of calls are answered if the number isn’t saved), and the industry has to adjust if it wants to keep its head above water. 

One industry leader included in the survey said that “right-party contact has fallen off a cliff,” and for many debt collectors, the future feels bleak. In fact, three-quarters of those surveyed by TransUnion believe that upcoming regulatory changes from the CFPB will be difficult for them to implement into their business. 

This can all feel like a death knell for collections and recovery, but there is hope! Industry thought leaders believe that new communication channels and methods hold the future for the industry, and companies that are beginning the adoption process have already seen promising results!

A collection revolution

To get ahead of the curve, collection firms “are trying to understand people better and get the right data,” reports a third-party collections leader. Revolutions begin when the people rise up, or in this case, when they stop picking up. Looking at customer communication preferences, the world has largely gone digital, but “few [collections industry] respondents report their initial contact is attempted via email (3%).” 

So what are the new channels driving collections forward? How do you communicate with consumers more effectively as the age of call and collect fades? The importance of digital forms of communication can’t be overstated. 61% of agencies surveyed are already using email to communicate in some form with another 22% looking to add it to their strategy in the next two years. SMS & text messaging only has a 16% adoption rate with another 53% interested in further expanding. 

While there is power in alternative forms of communication, at the end of the day whether you’re using email, text, direct drop voicemails, or messages tucked inside candy wrappers to communicate with customers, the tool is only as effective as its ability to reach the consumer at the right place and the right time.

Moving into a digital future

With the start of a new decade, it makes more sense than ever before to shift toward a digital collection strategy to properly contact consumers in debt. One of the most difficult hurdles of integrating a digital approach for collections isn’t simply starting to send emails or text messages, it is integrating these digital channels at scale for hundreds to thousands of consumers.

This means that the solution to effectively contacting consumers as collections continues to evolve comes from a combination of understanding performance data, navigating the complexities of email deliverability, and learning to recognize and adapt to consumer preferences.

It’s no wonder that so many companies feel unprepared for the coming changes at a systemic level. Getting started and preparing for change with the right collector today can mean your collections strategy continues to grow for years to come.

Ready to go digital? Let our team know!