“Tactics is knowing what to do when there is something to do; strategy is knowing what to do when there is nothing to do.” - Savielly Tartakower.
Savielly Tartakower is considered to be one of the most notable personalities ever to play the game of chess. He was among the first to be awarded the title of International Grandmaster back in 1950. Among his most well-known sayings was the one above that has excellent application to success in today’s modern business world.
Many of those in the accounts receivable management industry today find themselves looking to deploy the right tactics to respond to several seismic shifts that have occurred in recent months: the deployment of remote workforces in response to the COVID-19 pandemic, responding to the Consumer Financial Protection Bureau’s debt collection rule and whether new leadership atop the Bureau will alter what has already been released, and rapid advancements in technology that are revamping how collection agencies operate. Each of these situations requires companies to make substantial, business-critical decisions that will likely affect their future.
Developing a strategy during a period of uncertainty can feel like trying to hit a moving target. You don’t want to waste time building a plan only to have it change as soon as you launch it. But the longer you wait for the clouds to part and an exact direction to be laid out before you, the longer you live in limbo, and that is just not a viable option for a company of any size at this time in our history. Like in a chess match, decisions have to be made, and pieces have to be moved before time runs out, ideally planned out well in advance yet able to respond to changing dynamics. Not making a move results in time running out and you losing the game.
Responding to Covid
The extended impact of the COVID-19 pandemic is that employees will work from home for a long time. The latest numbers show that it will take at least eleven months to get the United States to the level of herd immunity. Humanity will take closer to seven years to get to the same level. Seeing numbers like this it is easy to believe things will never go back to the way they used to be. Companies did a great job of pivoting a year ago to be able to support employees working from home, but the expectation was that this would be a short-term blip on the radar. The reality is that this is not going to be a blip. People will be working remotely for years to come, if not for decades.
Today we should be developing business plans that incorporate the remote work dynamic and making decisions that reflect those changes, such as:
- The need for new policies and procedures to cover remote workers
- Dramatically reducing office space
- Hiring and training
- Equipment returns
- The impact on company culture
Not working on these now is the equivalent of letting your competition have multiple moves. Done right, organizations will be able to reduce their costs, build in flexibility, increase productivity, resulting in increased profits that can be fed back into the decisioning cycle, increasing the profit gap between you and your competitors. Taken to an extreme an organization that increases efficiency enough could decide to reduce their fees, gain market share, and still be as or more profitable.
The CFPB’s Debt Collection Rule
Like in chess, companies can’t make one move at a time in a vacuum. Moves need to be thought out in advance and made in a coordinated fashion if they are to be effective.
Planning ahead is exactly how companies should be addressing compliance with the CFPB’s debt collection rule. There may be more than nine months before the rule’s provisions are scheduled to go into effect and there are legitimate concerns that the new leadership of the agency may choose not to move forward with the rule’s release or make changes to the rule before it goes into effect. Taking a wait-and-see approach may feel like the right move, but there are so many changes to be made that waiting too long may make it impossible to get them all done in time. If a company needs to work with a software provider or technology vendor to make changes to their processes, those companies may need to get in a long line. We may already be running short on time and the time for action is upon us.
Here is what we know, the new CFPB has set the minimum requirements that need to be in place by November 30, 2021. What is your plan to ingest, digest, and implement these requirements? Good program management is crucial and starts with gathering the list of requirements. Next come timelines, resources, organization buy-in, and focused action with measurable results. We are not done.
Once we get all these things done we need to prepare for alternative regulatory changes. Worst case scenario planning is a great place to start. Get the team together to figure out how would your organization handle call caps of three a week, needing email consent given directly to the agency, Bill of Rights notices in every communication with the consumer, and substantiation requirements prior to reaching out a consumer to name a few. This makes you want to give up the game altogether. Knowing how you can respond to each of these gives you moves others will not be able to think of if they are thinking of them for the first time.
The Impact of Technology
Being too late to the party is something that is going to happen to many collection agencies when it comes to the rapid technological advancements that are being made in the industry today. Companies that have been too reluctant to consider technologies like text messaging, voicemail drops, machine learning, speech analytics, and data analysis are giving their competitors a huge — and unnecessary — competitive advantage. Waiting for things to go back to the way they were is as bad an idea here as if you ignore remote workforces and complying with the CFPB’s rule. This calls to mind another quote from Tartakower: “The move is there, but you must see it.”
The impact that technology is having on the ARM industry should not come as a surprise to anyone. It has been clear for years that technology was going to become the engine that drives efficiency and productivity for the industry for the next generation and the generation after that.
How many companies do you know that were successful that never made a move or were slow to move (also known as sat back and took a wait-and-see approach)? To improve is to change, but to perfect is to change often. Today’s leaders need to build plans but be ready to change them at a moment’s notice and take action. Just as in chess, when you see an opportunity, you have to act fast. If your opponent leaves his or her queen exposed, you go for it. Not taking the piece could mean the difference between winning and losing. Don’t become a cautionary tale.
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 (and lately, virtually) 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.
2021 members include:
AllianceOne Receivables Management
Capital Collection Management
Collection Bureau of America
Crown Asset Management
Healthcare Revenue Recovery Group
NCB Management Services
Phillips & Cohen
Professional Finance Company
Radius Global Solutions
Spring Oaks Capital
State Collection Service
The CMI Group