Ask the Experts: How are bankrupt accounts treated in the ARM industry?
Ask the Experts is an interactive section where readers can ask direct questions to the experts at Kaulkin Ginsberg, the leading strategic advisors to the ARM industry -- and a sister company of insideARM.com -- as well as other seasoned industry executives.
Question: What are the options for an ARM firm that has some of the accounts its working go bankrupt, and what are some of the recent trends?
Answer: (From Ed Barton, Linh Tran, and John Tu of B-Line, LLC)
Options for accounts in bankruptcy vary depending on the type of company facing the account. For third party collection agencies, the typical move is pretty straightforward: send the file back to the client.
But for the owners of the account, whether it is the original creditor or a debt buyer, the options become more complicated. Large issuers have robust operations to deal with bankruptcies, and much of the work is done in-house. Many smaller issuers and debt buyers, however, need to decide how to handle these accounts.
There are basically three things an owner of a bankrupt account can do: service the account, sell it, or do nothing.
Most large issuers service their bankruptcy accounts in-house. But many debt buyers need help with identifying the bankruptcy and then pursuing possible money owed to creditors in the bankruptcy process. Many of these firms contract with external bankruptcy specialists to help them navigate the process.
Selling the debt is also a viable option. Just like any other debt purchasing transaction, a sale sees the account leave the owner’s books so they do not have to worry about it anymore. There is a very mature debt sales market for bankrupt accounts, so finding a buyer is typically not a problem.
The last option is doing nothing. Doing nothing means literally doing nothing. Creditors almost never chose this option, but debt buyers sometimes will. They chose not to touch it for fear of running afoul of the law. They chose not to sell it because they don’t have the capability or volume to package it and market it. So they will just let it sit to eventually die.
Lately, we have been seeing a noticeable shift in strategy from sales to service. Right now, as with most debt purchasing markets, prices are deflated for bankrupt accounts. Creditors feel that they are not getting a fair price and debt buyers are finding that the secondary market is not as robust as it once was. So many are opting to service the accounts in-house or use vendors.
There are also regulatory issues that are keeping people away from the sales market. Increasing media demands are making it tougher to complete transactions. We anticipate that this will get worse over the coming months.
B-Line, LLC is one of the leading purchasers and servicers of consumer bankruptcy accounts in the United States. B-Line purchases secured and unsecured consumer debt included in both chapter 7 and chapter 13 cases throughout the nation.
Ed Barton is the CEO, John Tu is Vice President, and Linh Tran is Associate General Counsel at B-Line.
Ask the Experts: Finding Clients for a New Collection Agency
Ask the Experts is an interactive section where readers can ask direct questions to the experts at Kaulkin Ginsberg, the leading strategic advisors to the ARM industry -- and a sister company of insideARM.com -- as well as other seasoned industry executives.
Question: How can I find local clients for a new, small collection agency?
Answer: (From Michelle Dunn, founder and president of Never Dunn Publishing, LLC.)
Also, look in the phone book in your area and in the help wanted pages of your newspapers. If a company is looking for a credit manager or A/R clerk they may need a collection agency. You can also advertise in trade publications or publications that you know creditors are reading, also in your local papers for local business. Networking is another way to get your company name out there and asking existing customers for referrals.
Focus on industries that you have experience in, you and your collectors want to be very familiar with whatever industry you are collecting on. This will help you to obtain clients in that industry and you will collect more money for them because you will know the ins and outs of that particular industry.
For example, if you choose heating oil accounts to focus on, maybe you know how deliveries, minimum deliveries, Community assistance and service calls all work in that industry. Oil companies will feel more comfortable placing accounts with you if you are educated about this industry than with an agency that collects on anything and doesn’t have specific knowledge about that industry. This will also help you collect more money because when the debtor gives you an excuse or complaint, you may have an answer right away because you are educated and be able to close the call with a payment rather than saying, I don’t know and calling your client to find out and trying to get back to a debtor which decreases your chances of getting paid as quickly.
Michelle Dunn is the author of Starting a Collection Agency: How To Make Money Collecting Money. She has over 21 years experience in credit and debt collection. She is also a writer, publisher, consultant, published columnist and the author of many books on the topic of credit and debt collection. She is also the founder of Michelle Dunn’s Credit & Collections Association.
ASK THE EXPERTS: Using New Technology to Reach Debtors
Ask the Experts is an interactive section where readers can ask direct questions to the experts at Kaulkin Ginsberg, the leading strategic advisors to the ARM industry -- and a sister company of insideARM.com -- as well as other seasoned industry executives.
Question: What are some specific strategies collection agencies can employ to leverage new communications technologies to reach debtors?
Answer: (from Rob Fite, VP of Collections Solutions – LexisNexis® Risk Solutions)
The most basic interaction an accounts receivable management professional can have with a debtor is the traditional collection call. And this basic interaction is the goal of any ARM organization.
But it’s a goal that is increasingly difficult to attain. When answering machines were introduced to consumers, millions learned the simple pleasure of screening calls. And then came Caller ID, a technology that prevented people from suffering the indignity of not knowing who was calling.
As challenging as these hurdles were to overcome, nothing compares to the emerging roadblock of widespread wireless adoption. Mobile communication technologies currently enjoy a protected status from regulators in the United States.
While landlines are still the predominant avenue for collection calls, an ever growing percentage of debtors and the general population are utilizing mobile communication technologies for their primary communication, whether it be voice, text or email. In fact, more than 20 percent of American households today have only wireless phones, according to a recent study. Though many in the industry view mobile communications as a roadblock due to their current protected status from regulators in the United States, most wireless devices actually have a built-in technology that ARM companies can leverage to contact debtors: text messaging.
If one could solve the legal impediments and uncertainty, a straightforward sample strategy for using SMS text messages to contact debtors could be:
- Using an analytics suite, determine which of your contact numbers are wireless.
- Have a collector team dial those numbers for an attempted right-party contact (the regulations surrounding dialers and cell phones are still vague).
- If the collector does not make contact, do not leave a message.
- SMS the number with a brief message for the debtor to take action.
You can have a debtor visit a specific Web site where they would input a personal PIN. After they did this, they would have the option to pay the debt off, make a payment, or get additional information about their account. Many collection attempts fail because people are embarrassed to admit to anyone they have debt hanging over them. If you give the debtor an opportunity to access their account on their own time, certain segments may be more likely to pay. The explosion in the growth of online bill payment would certainly lead us to believe that people would warm to this option.
And these are scenarios that many collection agencies are currently exploring. Imagine where we could be heading: mobile payment technology, effective email strategies, etc. Who knows…maybe some enterprising developer will create an iPhone app for debt collectors.
- Using an analytics suite, determine which of your contact numbers are wireless.
- Have a collector team dial those numbers for an attempted right-party contact (the regulations surrounding dialers and cell phones are still vague).
- If the collector does not make contact, do not leave a message.
- SMS the number with a brief message for the debtor to take action.
You can have a debtor visit a specific Web site where they would input a personal PIN. After they did this, they would have the option to pay the debt off, make a payment, or get additional information about their account. Many collection attempts fail because people are embarrassed to admit to anyone they have debt hanging over them. If you give the debtor an opportunity to access their account on their own time, certain segments may be more likely to pay. The explosion in the growth of online bill payment would certainly lead us to believe that people would warm to this option.
And these are scenarios that many collection agencies are currently exploring. Imagine where we could be heading: mobile payment technology, effective email strategies, etc. Who knows…maybe some enterprising developer will create an iPhone app for debt collectors.
Rob Fite is the Vice President of Collection Solutions for the LexisNexis® Risk & Information Analytics Group, and brings with him nearly 20 years of experience in the fields of collections, credit, and risk management. At LexisNexis, Rob is responsible for leading LexisNexis collections market strategies, product development, business direction and revenue growth.
EDITOR'S NOTE: This article originally appeared in Know Your Debtor, a new FREE quarterly email newsletter published by insideARM and LexisNexis that focuses on understanding trends impacting consumers. To receive the newsletter, please sign up at http://www.insidearm.com/go/subscriptions.
Ask The Experts: Can Mortgage Backed Securities Debt Be Sold?
Ask the Experts is an interactive section where readers can ask direct questions to the experts at Kaulkin Ginsberg, the leading strategic advisors to the ARM industry -- and a sister company of insideARM.com -- as well as other seasoned industry executives.
Question: Can the debts that “back” mortgage backed securities be sold individually?
Answer: (from David Lavine, Director at Kaulkin Ginsberg)
This question requires some explanation of the actual structure of these financial instruments. A mortgage-backed security (MBS) is an asset-backed security or debt obligation that represents a claim on the cash flows from mortgage loans, most commonly on residential property. Commercial Mortgage-backed securities (CMBS) are secured by commercial and multifamily properties. First, mortgage loans are purchased from banks, mortgage companies, and other originators. Then, these loans are assembled into pools. This is done by government agencies, government-sponsored enterprises such as Ginnie Mae, Fannie Mae and Freddie Mac and private entities.
Mortgage-backed securities represent claims on the principal and payments on the loans in the pool, accomplished thru securitization. These securities are usually sold as bonds, but in recent years creative marketing has created a variety of securities that derive their ultimate value from mortgage pools. The asset-backed security itself is a financial instrument whose value and income payments are sourced from and collateralized (or “backed”) by a specific pool or group of underlying assets. These assets are typically individually small and illiquid and are pooled together to allow them to be sold to general investors.
Usually, a special purpose vehicle (SPV) is created to process the securitization of asset-backed securities. The SPV creates the securities, markets and sells them, applies the proceeds to fund the acquisition of the individual assets and is responsible for the grouping of the underlying individual assets into the pool in question. Once created, the individual assets are unable to be sold individually.
David Lavine is the leading valuation expert in the credit and collection industry. He provides business valuation and expert witness/litigation services to select clients. For more information about Kaulkin Ginsberg’s services for debt buyers, contact us at hq@kaulkin.com.
ASK THE EXPERTS: Starting or Locating A Small Collection Agency
Ask the Expert is an interactive section where readers can ask direct questions to the experts at Kaulkin Ginsberg, the leading strategic advisors to the ARM industry – and a sister company of insideARM.com -- as well as other seasoned industry executives.Question: I am an experienced ARM industry executive and I have been thinking of starting or acquiring a small collection agency. Are there any small agencies (less than 10 collectors) for sale and how do I find one, or how can I get information on starting my own?
-- Matt, Connecticut
Answer: From Michael Lamm, Associate at Kaulkin Ginsberg
Steps for Acquiring a Small Collection Agency
1. Tap into your local network. To acquire an agency, the first step is finding one. Your best bet is to start voicing your acquisition interests with your network of ARM industry contacts.
2. Get involved with your ACA unit. Another suggested path is getting involved with your local ACA chapter which tends to attract many small agencies that have under 20 collectors. Local chapters typically have owner/executive networking events that you can attend throughout the year to get to know the other members.
3. Search the ACA membership directory. If you know the name of the agency or the owner you are targeting and don’t have their contact information, another resource is the ACA membership directory at http://www.acainternational.org/memberdirectory.aspx.
4. Register your acquisition interests with Kaulkin Ginsberg. Many small agencies contact us when looking to sell. Please let us know your criteria and if we come across an agency that meets your criteria (i.e. size, location, how you plan to finance the acquisition, consumer vs. commercial, etc.) we will let you know. Feel free to email your criteria to mlamm@kaulkin.com
Tips for Starting an Agency
1. Understand the regulatory environment. 20 years ago it was a lot easier to start an agency -- all you needed was a phone and a client to give you some accounts to call. Fast forward to 2009, the ARM industry has become heavily regulated and with the current administration, more regulation is likely to come. Be sure you have a complete understanding of the licensing you will need and any other regulatory requirements you must meet in the state(s) in which you will do business. You may also consider joining the ACA or other industry associations to stay on top of regulatory updates in your region and industry specialty.
2. Investigate start-up costs. If you plan to operate a consumer-focused agency that is national in scope, you will need to become licensed nationally which can typically cost $75,000 to $100,000 plus the costs of collection software, buying call center equipment (desks, chairs, work stations), leasing a facility and any other requirements a client may require before you obtain placements from them, like a SAS70. Just to get a consumer agency started, you could be looking at spending a $1 million before you start collecting on any accounts!
3. Weigh the benefits of start-up vs. acquisition. As a result of these start-up costs, many former executives have been leaning toward acquiring an agency that at least gets them started and then they can build on the platform. On the flip side, when you acquire another person’s agency, you may be walking into someone else’s headache. It may be better to create your own headache than start with someone else’s!
4.Utilize resources. If you end up going the start-up route, our portal site, www.insideARM.com has a lot of informational resources (market data, current news, publications) that you can access to help you develop your plan.
Michael Lamm (http://www.linkedin.com/pub/0/61/a2b) advises owners on their growth and exit strategies for Kaulkin Ginsberg’s Strategic Advisory team. Michael can be reached directly at 240-499-3808 or by email. You can also read his other blogs/articles at http://www.insidearm.com/go/blogs/Lamm.
ASK THE EXPERTS: The Receivables Process in Small Business
Question: What do credit and collections mean for small businesses?
Answer: (from Paul Legrady, director at ARM advisory firm Kaulkin Ginsberg)
insideARM primarily discusses the collection of charged-off consumer debt – the unpaid credit card bills, phone bills, and other receivables that companies have made to individuals. Most of these lenders – the credit card companies, telecommunications companies, utility companies, etc. – are large corporations.
An important part of the collection industry involves a totally different type of collections – the unpaid invoices owed to one small business by another. It’s interesting that almost all of the businesses that operate in the U.S. -- 99.9 percent -- are small businesses, defined as having fewer than 500 employees. It’s also true that about half of the small businesses shut their doors within their first five years of operation.
Like credit card companies have customers who can not (or choose not to) pay bills, small businesses also have outstanding receivables, the unpaid invoices that pile up over time and drain the financial strength of companies that make sales based on credit. The inability small businesses to make good decisions about who should receive credit, and how extended credit should be collected, contributes without question to the 50 percent failure rate described above.
The credit risk managers that work within these companies have real challenges as they decide how credit should be extended and how overdue bills should be collected.
- They must screen potential clients as they are being approved for purchases. In this way, the salespeople working for a small business, whose job it is to close a sale, may conflict with the risk managers within those companies, whose job it is to approve only desirable sales. When a salesperson says “yes,” a credit risk manager might say “no” – a challenge at a time when most small businesses are looking for more on the top line.
- They must be technically precise, ensuring that invoices, purchase orders, and other documentation involved with a sale to other businesses are completely accurate. Invoices can get lost or misunderstood by clients in the short term. In the long term, collection efforts rely on the technical accuracy of these materials, especially when disputes are resolved through legal channels.
- They rely on information suppliers. As companies that grant credit to consumers run credit scores for individual borrowers, commercial lenders access sources about small businesses that describe the financial health of their potential and existing clients. This information is crucial to the credit granting process, as well as the collection process that follows.
- They draw on the resources of service providers that specialize in collections. The Commercial Law League of America, for example, has more than 3,000 attorneys and commercial collection agency managers that specialize in specific types of commercial collections, many times in specific industry sectors (e.g., shipping) and geographic areas (e.g., Florida).
For small businesses like consumer credit grantors, the decision of how to extend credit goes a long way in determining how successfully that credit will be collected after invoices go unpaid. Making these decisions more effectively can contribute to the overall financial strength of small businesses in this challenging economy.
ASK THE EXPERTS: Federal Healthcare Reform
Question: Will federal healthcare reform jeopardize the market for healthcare collections?
Answer: (from Michael Klozotsky, Analyst, Kaulkin Ginsberg)
Despite last week’s announcement that Congress will not take action on federal healthcare reform legislation prior to the August 7th recess, a bill to overhaul the nations healthcare system is all but assured before the end of the year. Will efforts to establish a public insurance plan, contain costs, and revamp access to and the quality of patient care impact the ARM industry? Undoubtedly. Will those effects be detrimental? Not necessarily.
In early June, ARM industry groups and owners and executives in the healthcare market began to raise concerns that several proposals for federal healthcare reform would negatively influence medical collections. Those proposals were speedily cast into light as “hamstringing non-profit providers” and “harming millions of patients” by some inside the ARM industry. Others described the language in the various proposals as “misguided and damaging” and suggested that early drafts of Congressional reform bills would “consider punitive measures against all non-profit hospitals.”
One problem with these depictions is that they tended to generalize about the reform proposals, and did so only in negative terms. Moreover, in early June few people (if anyone) in the ARM industry had actually seen one word contained in the bills being crafted in Washington.
As it turns out, early anxiety about a doomsday event for the ARM healthcare market was unfounded. While specific details about the Senate Finance Committee’s position on health reform have yet to emerge, the House bills do not contain overtly damaging language. It seems there is a lesson here for healthcare collection professionals: vigilance and patience are perhaps the best course of action as federal reform efforts unfold. Hasty reactions, prior to assessing all the facts, may inject some dollars into the U.S. economy in the form of expenditures for hair replacement therapies and blood pressure medication, but they do little to shield medical collection agencies, debt buyers, and vendors from impending legislative risk.
And what precisely is that supposed risk? Broader insurance coverage may reduce the total volume of delinquent patient accounts, but in many instances self-pay already meant no-pay. More stringent requirements for determining charity care eligibility may also divert some patients from a collections stream, but if in fact these patients should have been qualified for some type of financial assistance prior to reform, the risk for collection agencies was actually greater prior to reform than it will be after this type of legislation is passed. No hospital wants to see its name in the local newspaper because its collection agency partner “harassed” a low-income cancer patient over a past due bill.
In fact, some health-related legislation already passed by Congress this year, as well as a part of the Obama Administration’s budget that expanded funds for healthcare Information Technology have actually created new business opportunities for ARM companies. The expansion S-CHIP early in 2009, which provided health insurance coverage to an additional four million low-income American children, is administered and partly funded by individual states. But as the majority of U.S. states face budget shortfalls that will extend well beyond 2010, creative solutions for how to meet their end of the S-CHIP bargain were in short supply. In a number of states, S-CHIP recipients are for the first time required to pay some co-pays under the program. Given the current recession, it is likely that some percentage of these patients will accrue delinquent balances with healthcare providers. In short, the expansion of Federal and state insurance coverage has, in this example, actually created a new source of revenue for healthcare collection agencies.
One could also argue that healthcare reform may provide an indirect upshot for the entire ARM industry. The economic crisis that persists today will absolutely drive an increase in the number of un- and underinsured Americans. And unanticipated medical events are often cited as a leading cause of consumer bankruptcy. In the context of massive investment losses, unemployment risk, staggering reductions to the equity in consumers’ homes, and tighter access to credit since the recession began in December 2007, a single serious illness or injury may quickly lead a patient to file for protection from creditors. The option of a public insurance plan, if enacted by Congress as a part of broader healthcare reform, might divert that consumer/debtor from a bankruptcy solution and sustain his financial obligations to medical and non-medical creditors alike.
During President Obama’s prime time press conference on healthcare last week he said:
"This is not just about the 47 million Americans who don't have any health insurance at all. Reform is about every American who has ever feared that they may lose their coverage if they become too sick, or lose their job, or change their job. It's about every small business that has been forced to lay off employees or cut back on their coverage because it became too expensive. And it's about the fact that the biggest driving force behind our federal deficit is the skyrocketing cost Medicare and Medicaid.
"So let me be clear: If we do not control these costs, we will not be able to control our deficit. If we do not reform health care, your premiums and out-of-pocket costs will continue to skyrocket. If we don't act, 14,000 Americans will continue to lose their health insurance every single day. These are the consequences of inaction. These are the stakes of the debate that we're having right now."
Successful ARM companies should look for opportunities to arise out of healthcare reform efforts, rather than descry the winds of legislative change. Medical collection agencies, debt buyers, and service or technology vendors who partner with healthcare creditors should assess their current business practices, develop strategic plans (in real-time) for short term sustainability, and actively seek new prospects for growth with the knowledge that the enactment of federal healthcare reform legislation is a “when,” not an “if” proposition.
Assess, develop, and seek. Those in the ARM industry, and specifically those in the healthcare market, who do not will soon feel the consequences of inaction in declining liquidation performance, lost market share, and hazards to future viability.
Ask The Experts: The ARM Industry in the Second Half of 2009
Question: How will the economy impact the ARM industry in the second half of '09?
Answer: (from Mark Russell, director at Kaulkin Ginsberg. Mark explores three key elements of the ARM industry below: consumer financial health, commercial debt, and the government collection market.)
Consumers
Over the past 18 months many consumers have seen their active credit card lines reduced, inactive credit card accounts closed out, and told that they need to meet higher credit standards in order to receive a loan to buy a home or car. They have also witnessed the values of their homes, retirement accounts and 529 Plan balances decline. On top of all of that they have been dealing with increased financial uncertainty due to higher unemployment and underemployment rates, and rising fuel and food prices.
These trends have put many consumers in a financial bind, resulting in a substantial impact on the ARM industry by causing placement levels of delinquent and charged off consumer accounts to rise significantly while simultaneously reducing the liquidation rates on these portfolios due to an inability of many consumers to pay their debts off in full or settle them. However, these same trends have also caused consumers to change their spending habits in 2009, motivating them to save more of their disposable income as an insurance against future financial issues. Many consumers are also trying to reduce their costs by paying their debts on time to avoid costly late fees and onerous interest rates, and making higher payments on their outstanding debts in an effort to reduce/eliminate their balances as quickly as possible.
This is creating an increase in liquidity for some consumers, which could have a positive impact on portfolio liquidation rates in the second half of 2009. However, if economic conditions worsen over the next several months, consumers’ ability/motivation to make debt payments may decrease until they feel more secure about their personal financial situations, which could have a negative impact on liquidation performance.
Prediction: Placement levels of delinquent and charged off consumer accounts will continue to rise, but could potentially flat-line during the second half of 2009, while liquidation rates will remain flat or possibly increase compared to the second half of 2008.
Commercial
During the past 18 months many U.S. companies have also been working diligently to de-leverage their balance sheets in order to survive the recession and create as much financial flexibility as possible to pursue attractive business opportunities. This has caused an increase in delinquent and charged off commercial placements as some companies have become more aggressive in pursuing their outstanding receivables, while others have struggled to make their debt payments.
Like previous recessions the commercial sector has enjoyed a delay in liquidation rate declines compared to the consumer sector, so some commercial agencies and debt buyers experienced an up-tick in financial performance in 2008. However, starting in 2009, some commercial agencies experienced a decline in liquidation rates, a trend which continued into Q2. These liquidation rates may fall further during the second half of 2009 as many small and mid-sized U.S. companies continue to struggle to survive this recession.
Prediction: Placement levels of delinquent and charged off commercial accounts will continue to rise during the second half of 2009, but liquidation rates will decline.
Government
Despite the federal government’s efforts to stimulate the economy via various fiscal and monetary policy programs and financial bailouts, government entities are still struggling to make ends meet. In 2009, many government institutions have been forced to substantially reduce their budgets and find alternative means to generate revenues. This has created a tremendous opportunity for ARM companies, as placement volumes of delinquent municipal, state and even federal accounts have increased. While liquidation rates have declined over the past 18 months, the level of decline has not been as significant as non-government debt accounts.
Prediction: Placement volumes will continue to rise during the second half of 2009, particularly from local and state government entities, many of whom will be outsourcing placements for the first time. This will create a significant growth opportunity for the ARM industry.
Ask the Experts: Effectiveness of Dialer Campaigns
Question: How can I gauge the effectiveness of my dialer campaigns?
Answer: (from Louis Summe, CEO of LiveVox)
The recession has forced credit and collection organizations to review all technology and processes. Dialers are no exception. Recently, several publicly traded debt buyers announced they were able to increase collections during a down economy by doing just that.
Tracking system productivity:
Post-campaign analysis of dollars collected is the traditional way of measuring performance. Better performance can and is being realized through dynamic tuning of dialer campaigns. Right-party connects per agent per hour coupled with talk time indicate that the dialer is running well. Dollars collected per agent is a measure of personnel quality. Collection organizations should be shooting for a ratio of 60/20/20 — 60% of an agent’s time on a dialer should be speaking with consumers only, not machines, compared with 20% or so of wrap-up time and 20% or less of actual waiting/ready time.
Answering machine strategies:
Answering machines make up about half of all calls and 70% to 80% of all billable calls. Some agencies might believe agents are talking all day, when in reality, they spend most of their time leaving messages on machines. Agents need to talk to consumers. Let machines talk to machines.
Otherwise, this costs an agency twice. First, agents cost about $0.30 a minute, and automated systems can leave these messages for less than a nickel. For every 10,000 messages left by agents, an agency has overpaid by at least $2,500. Secondly, this is time agents aren’t speaking to consumers. In the 10,000 message example, you’ve lost more than 160 hours of true agent productivity.
Capacity requirements and cost:
Because consumers are harder to reach on the phone, dialers with fixed telephony can be less effective. LiveVox analyzed the connected call data of collection industry clients and found they need on average 7-10 lines (sometimes less, sometimes much more depending on portfolio or time of day) or they won’t hit talk time of 60% without processing machines.
If your agency is off that mark, calculate the total cost of expansion, including seat licenses, maintenance and telephony infrastructure like T1s/DS3s and compare the total with other solutions.
Telecom fees:
Telecom costs come right out of the bottom line. Review your detailed bills to check if you’re unknowingly paying minimum durations or short duration charges. You should see calls of 0.1 minutes on the itemized call portion of your bill and per call charges of 10% of your variable rate. If your lowest durations is 0.3 or more, or if your carrier has a minimum charge of one cent per call, as many do, your telecom bills are needlessly inflated.
Louis Summe, after a career of developing and managing communication technology, co-founded and is the current CEO of LiveVox, a leading provider of hosted dialing services to the credit and collections industry.
Ask the Experts: What Can Agencies do to Improve Media Coverage?
Ask the Experts is an interactive section where readers can ask direct questions to the experts at Kaulkin Ginsberg, the leading strategic advisors to the ARM industry – and a sister company of insideARM.com -- as well as other seasoned industry executives.Thank you to one of our readers for our latest question:
Question: What actions can collection agencies take to combat the recent negativity they are receiving from the media?
Answer: (from Mike Ginsberg, President & CEO of Kaulkin Ginsberg)
Negative press about collection agencies is not going to go away -- especially in a down economy. Here are 5 things that can be done to combat the negativity portrayed by the media.
1. Be responsive to the press. When they call, try to respond as quickly as possible, as they are often rushed by their editors to hit a deadline so they can go to print. Most journalists have not been tracking the industry and therefore they lack a fundamental understanding of the issues they are covering. When a reporter reaches out, it becomes an opportunity for you to become an advocate for the industry. We need to correct any inaccuracies and challenge any misperceptions right away. Don’t assume someone else will do this. Get involved. Of course, keep in mind that when you do talk to a reporter, whatever you say is “on the record” and may be quoted. Be mindful of how your statements will look in print.
2. Adopt a zero tolerance policy toward violations and stick to it. Bad press is a reflection of persistent misconceptions about the industry. Don’t contribute to the stereotype. Agency executives must clearly define the rules with their entire staff and fully enforce them without exception. Be consistent with enforcement when collectors break these rules -- even with your top collectors. Make sure that collectors and managers are consistently respectful toward to the consumer (Did you notice I did not say debtor?). All violators must be reprimanded immediately and with severe action. Credit grantors must stop rewarding violators with new placements. Complaints should be addressed immediately. Complaints should be evaluated immediately and those with merit should be addressed with severe penalties such as loss of business or fines.
3. Train and retrain. Regardless of the size of your collection operation, invest in training your collectors thoroughly before they interact with consumers and provide complete supervision when they make their way onto the collection floor for the first time. Retrain to keep them fully informed on proper collection techniques. Be sure to train your collection management also, and don’t simply assume your best collectors make the best collection managers. Many don’t.
4. Support your local community. You are fighting negative perceptions each and every day. This will not go away, but one of the best long-term approaches you can take is to become a bigger part of your community by participating in local charitable and neighborhood efforts. Encourage your staff to get involved. Coach a team. Sponsor one. And don’t just focus on where you’re headquartered. Many problems take place at remote call centers. Build on your community awareness at a very local level in each of your call centers.
5. Support your association’s efforts. The industry’s leading associations must consistently and routinely regulate their members to prevent those who break the rules from maintaining their memberships or certifications. Zero tolerance at the association level is essential and public reprimand will make executives think twice about breaking the rules. It may cause some minor losses in membership dues but it will benefit the rest of the members and the industry at large.
