This article is part of the iA Think Differently series. Written by members of the iA Innovation Council, the series showcases thought leadership in analytics, communications, payments, and compliance technology for the accounts receivable management industry.
As many collection operations lay out their goals for 2020, they are challenged to achieve those objectives using their legacy collection system. To achieve those goals, many organizations are considering upgrading to a more modern collection system. If you are anywhere in the process of thinking about a new collection system, here are some areas for you to consider as you use this opportunity to enhance your organization and operations, not simply making a technology refresh.
Look for a collection system that can provide you with significantly more automation than your current system. There will always be areas where you will need a live agent, but for everything else, your collection system should automate as much as possible. This includes:
- Linking debts and debtors into consolidated cases. Many legacy systems treat each debt separately. By consolidating liabilities into cases where permitted, you will increase efficiency and improve customer service by talking with customers about the totality of the amount owed. You will also be able to reduce phone calls and postage costs because debtors will only receive one contact per case.
- Support for risk-based collection and correspondence strategies tailored to each account. Not all debtors are the same, so why should you collect on them all using one strategy? While you should treat similar debtors the same, you don’t need to treat all debtors using one strategy. The system should automatically execute the best strategy for each case.
Automation delivers both consistency and compliance. When the process is automated, you can ensure that your customers receive consistent treatment, and all applicable due process and compliance checks are performed each time.
2. Self-Service Portal
Many of your customers no longer want to talk with a live agent. When they are ready to resolve their account, most would rather go online and do it themselves. You will see a significant number of customers that resolve their debt with no human contact, so key features you want on your portal include allowing consumers to make payments and payment Agreements, and if allowed, to request settlements.
3. Automated Communication
As technology changes and the Fair Debt Collection Practices Act (FDCPA) continually evolves, you will want to ensure that your new collection system supports fully automated communications. The FDCPA controls who you can contact and how you can contact them. While the FDCPA has not been updated to cover newer methods of communications such as SMS and emails, the Consumer Financial Protection Bureau published proposed rules in 2019, and the industry is actively awaiting changes that may allow for these modern forms of communication within collection activities.
When you have the proper permission from your customer to use automated communications (calls, emails, and SMS), you can lower the cost of collections and increase customer satisfaction as you utilize their communication channel of choice.
Technology is now available to send fully automated outbound communications, allowing the consumer to pay directly from their smartphone. A modern automated system should support both SMS and emails, each of which should provide the capability for the customer to click a hyperlink to pay or enter into a payment agreement, and receive payment reminders via email or SMS.
4. Open Architecture
Change is the only constant you can bank on. Many organizations use their collection system for 10-20 years or more before they actively look for a new system. Therefore, you not only need a new collection system that can support your needs of today but one that can support your needs of tomorrow. To support this, you want a system that delivers an open architecture, allowing you to connect to any data provider or third-party system (e.g., dialer, documentation management, communications) of your choice. If you select a collection system with those capabilities pre-built into the (closed/proprietary) system you could be stuck using their preferred providers, not your preferred provider. You also may want to utilize tools like an enterprise-level data warehouse and will want the ability to easily export your data in real-time.
5. Configuration, Not Customization
Another way to ensure that you remain future proof is to have a collection system that is flexible and configurable enough so you can implement your business rules with no modification to the base system. You will want to ensure that new data elements can be added through configuration and that those data elements are available within the system for workflow, display, and reporting. You will also want to confirm that the system is flexible enough to add new user interface windows through configuration.
If the new collection system doesn’t require modification, then you can be assured that it has the flexibility to configure new data and a highly diverse set of collection strategies. Over time, change will occur (that is a given), and you want to be able to add new debt types and new customers and support new external compliance rules through configuration. You want to be sure that you can receive, utilize and display new data and change your business rules without having to go back to the vendor or to modify the application. This allows you to lower your total cost of ownership and maintain control of your future.
If you have a system that requires modification it means future upgrades will be more difficult and costly. You might even reach a point where it is cost-prohibitive to take upgrades, preventing you from taking advantage of the new capabilities.
Many organizations are realizing their collection system is nearing its end of life. As you consider your next steps, the choice you make will truly shape your organization for years to come. Make sure you are thinking about your needs both for today and tomorrow. While you need to be cost-conscious, the selection you make will also allow you to dramatically move your organization forward and achieve greater success for years to come.
Ted London is Senior Director of FICO’s Government, Higher Education and Collection Agencies sector.
About the iA Innovation Council
The iA Innovation Council is a collaborative working group of product, tech, strategy, and operations thought leaders at the forefront of analytics, communications, payments, and compliance technology. Group members meet in person several times each year to engage in substantive dialogue and whiteboard sessions with the creative thinkers behind the latest innovations for the industry, the regulators who audit and establish guardrails for new technology, and educators, entrepreneurs and innovators from outside the industry who inspire different thinking.
2020 members include:
Absolute Resolutions Corp.
AllianceOne Receivables Management
Capital Collection Management
Crown Asset Management
Enhanced Recovery Company
Healthcare Revenue Recovery Group
NCB Management Services
Phillips & Cohen
Professional Finance Company
Radius Global Solutions
Spring Oaks Capital
State Collection Service
The CMI Group