Banks have a new competitive battleground: Debt collection.The same high level of attention is being given to debt collection as has long been given to the front end of the credit process: offering mortgages, HELOCs, personal and auto loans and payment cards.
Why is debt collection being added to the list? Because there’s less money to go around and consumers are managing their budgets differently.
In years gone by, consumers could take out a home equity loan, line of credit or tap into a retirement account to stay current. Today, home values are only slowly climbing back to pre-recession prices and many homeowners remain under water. Credit is tighter, and harder to qualify for. Retirement accounts aren’t being funded the way they were pre-recession, and consumers have fewer resources for debt payment.
Debts are also being paid slower and as a result, first and third parties are waiting longer for repayment. This means increased cost and additional effort to obtain payment on delinquent accounts. For a majority of the organizations in this situation, this additional time and money aren’t yielding increased payments, which means the cost per dollar collected is increasing.
Even a small change in the cost and time to collect can mean millions of dollars to the bottom line. A recent report from Proformative indicates 35% of survey respondents in accounts receivable plan to invest in automation for collection, and 59% are motivated to do this to reduce overall costs.
Yet many organizations collecting debt still use antiquated systems and a variety of manual tasks. Instead of interacting with consumers, collectors spend time locating information, reformatting, toggling between systems and adding updates to a stack of papers.
Without the right tools, even the most successful of collectors have a hard time doing their jobs effectively. What automation and technology offers, at its most basic level, is a commodity in short supply for all of us: more time. It offers collectors the ability to contact three, even four times as many accounts each day. It prioritizes which accounts to work and collect from. It presents account information and resources in a logical manner, determines optimal method of contact, selects appropriate follow-up procedures and provides valuable information essential to future success.
The benefits of automating the collection and recovery process are transformational. Yet decision makers struggle to select an automation solution, mired in the volume and variety of choices available. PayStream analysts attribute this to the overwhelming number of options, along with a lack of knowledge about solution benefits.
Exploring different types of collection automation strategies on your own is time-consuming and can result in as many questions as answers.
To get a better understanding of this issue, join us for Best Practices in Automating the Collection Process from FICO and PayStream Advisors on Tuesday, January 20 at 1:00pm EST, 10:00am PST. AR expert Henry Ijams, Founder and Managing Director with PayStream Advisors, leads the discussion. To register, visit: http://events.fico.com/LP=535