Collection Agencies

A good place to see how collections impacts competitiveness is the 31-day “time bomb” under IFRS 9 in the financial services industry. To prevent accounts from rolling to Stage 2, and with its requirement for lifetime expected credit loss impairment, some creditors are looking to accelerate collections by assigning more accounts to external collection agencies.

There’s concern, however, about increased exposure to other compliance risks, since creditors are responsible for ensuring third parties treat consumers fairly and adhere to applicable laws and regulations.

Increased placements is a good thing for collection agencies, of course. Instead of throwing bodies at this opportunity, smart organizations are using analytics-driven strategies and automated processes to focus their resources on accounts where they can make the biggest impact in the shortest time, not only to prevent 31-day delinquencies but to collect and recover more.