Now more than ever, it is critical that credit unions, and other institutional lenders do everything they can to maximize recoveries and reduce unnecessary charge offs. Building a strategic, data-driven approach is the key first step for internal collection teams to optimize their debt recovery process. There are three critical activities to take to begin building your approach.
First, establish accurate goals and develop a plan to improve recoveries.
Understanding your baseline performance for recoveries will give you a metric to measure against as you implement improvement plans. Typical plans will include an assessment of the value of your inventory and recovery potential; and the development, management, and performance of your internal collections specialists.
For most organizations, untapped potential can be found in developing a comprehensive scoring model, which can help predict the long and short-term recovery rates of various inventory segments. A scoring model will allow you to focus your time, effort and resources on the accounts with the highest probability for resolution and the greatest return potential.
Second, utilize analytics and data to make better operational decisions.
For instance, as accounts are worked in your Collection Management System (CMS), all collector and system actions should be captured as transaction records. Using this data, heuristic algorithms can automatically determine the optimized criteria for “work lists” based on scoring model outputs within the CMS.
From there, a second layer of heuristics can help determine a work schedule to optimize contact attempt times. This will accelerate the discovery of when a Consumer will be most readily engaged to discuss their account. At the same time, it will reduce total contact attempts, unwanted phone calls and associated complaints, and ultimately create a right-time-experience for the Consumer to speak with your collection specialist.
Lastly, provide higher levels of service to your Consumers.
Once contact is established with a Consumer, your collection specialists need to take the approach of understanding each Consumer’s situation, and then educating and counseling the Consumer on all options for resolving their defaulted loans. Training and development are your most effective tools for ensuring high levels of professionalism and performance expectations are met. Ongoing training around collection techniques, verbal cues and listening skills, and compliance with applicable regulations regarding privacy and confidentiality (e.g., FDCPA, FCRA, GLB, HIPAA, FERPA, and The Privacy Act of 1974) can all help contribute to a better customer experience.
Read more about the additional critical steps you can take to begin increasing your recoveries by downloading our free E-Book: 5 Steps You Can Take Today to Maximize Debt Recoveries.
