Talk Back Live Maximizing Your Collection Agency Partnership   J. Christopher Lang Linebarger Goggan Blair and Sampson, LL...
RFP Process <ul><li>Writing your RFP. </li></ul><ul><ul><li>Allow sufficient time - 6-9 months </li></ul></ul><ul><ul><li>...
RFP Process <ul><li>Scheduling </li></ul><ul><ul><li>Allow a minimum of 45 days for the response. </li></ul></ul><ul><ul><...
RFP Process <ul><li>Prequalify potential bidders </li></ul><ul><li>Pro & Con of this recent trend </li></ul><ul><ul><li>Li...
RFP Process <ul><li>Question and Answer Period </li></ul><ul><ul><li>Set a deadline for the questions and when the respons...
RFP Process <ul><li>Pre-bid Conference </li></ul><ul><ul><li>Pro - Con of timing.  </li></ul></ul><ul><ul><li>Mandatory or...
RFP Process <ul><li>Fee Structure -  </li></ul><ul><ul><li>Fixed vs. Bid fees  </li></ul></ul><ul><ul><li>Fixed - determin...
RFP Process <ul><li>Reference Data  </li></ul><ul><ul><li>Request reference data in desired format  </li></ul></ul><ul><ul...
RFP Process <ul><li>Staffing and Experience  </li></ul><ul><ul><li>Individual vs. Corporate Experience. </li></ul></ul><ul...
RFP Process <ul><li>Other Suggestions </li></ul><ul><ul><li>Limit the number of pages in the response. </li></ul></ul><ul>...
RFP Process <ul><li>What about the proposal content? </li></ul><ul><ul><li>Know your audience, do they want  </li></ul></u...
RFP Process <ul><li>Who can win? </li></ul><ul><ul><li>Who are the incumbents?  </li></ul></ul><ul><ul><li>What are the cu...
RFP Process <ul><li>What do we win?  </li></ul><ul><ul><li>How many placements? How often? </li></ul></ul><ul><ul><li>Are ...
RFP Process <ul><li>When do we start?  End? </li></ul><ul><ul><li>What is the contract period? </li></ul></ul><ul><ul><li>...
RFP Process <ul><li>Why would they choose me? </li></ul><ul><ul><li>Have I dotted the i’s and crossed  </li></ul></ul><ul>...
RFP Process <ul><li>How can I set myself above the competition? </li></ul><ul><ul><li>References are key in this area. </l...
Rates –  Why are rates so important?   <ul><li>Rate structures are a primary factor in overall performance. </li></ul><ul>...
Rates –  Speaking of Performance, what do you really get with a low bid? <ul><li>Rates are a major factor that drives perf...
Rates – The “Net Back” Principle <ul><li>LOW BID </li></ul><ul><li>Placement  $1,000,000 </li></ul><ul><li>Recovery %   17...
Rates –  OK, but what about State Agencies that must use low bid? <ul><li>Evaluation criteria can place heavier emphasis o...
Rates –  How would you suggest a fair rate be established? <ul><li>Review past history  </li></ul><ul><ul><li>Recovery per...
Rates –  What are the differences between In-house and Outsourcing? <ul><li>COSTS  </li></ul><ul><ul><li>Hiring – salary, ...
Rates –  Cont. (differences between In-house and Outsourcing?) <ul><li>Tools  </li></ul><ul><li>Personnel </li></ul><ul><u...
Rates –   Cont. (differences between In-house and Outsourcing?) <ul><li>Considerations </li></ul><ul><ul><li>Volume, Quali...
Performance Evaluation – Use the KISS Method <ul><li>This is a collection contract, so recovery rate should be your primar...
Performance Evaluation – Use the KISS Method <ul><li>Implement a rewards and penalty system </li></ul><ul><ul><li>Give mos...
Performance Evaluation – Use the KISS Method <ul><ul><li>In order to better maximize your results, you could also use a co...
What To Evaluate and  The Reward You Get <ul><li>Measure what is important to you. </li></ul><ul><li>Rewards and Incentive...
AWG –   What are some of the benefits to using Collection Agencies to assist in AWG? <ul><li>Provides continuity in the co...
AWG –   What are some of the benefits to using Collection Agencies to assist in AWG? <ul><li>Improved performance </li></u...
Default Aversion–  How can a Collection Agency assist in Default Aversion? <ul><li>Supplement GA Activities </li></ul><ul>...
Default Aversion – (cont.) Are there any other benefits? <ul><li>The same benefits can apply between in-house vs. outsourc...
Default Aversion – (cont.) Are there any other benefits? <ul><li>Tools  </li></ul><ul><li>Personnel </li></ul><ul><ul><li>...
Special Acknowledgments  to the following: Ken Player, NCHELP for moderating the session Rick Sykora, Oklahoma Guaranteed ...
THANK YOU  From Our Panel! J. Christopher Lang Linebarger Goggan Blair and Sampson, LLP Carl Perry ACS – Aman Collection S...
Upcoming SlideShare
Loading in …5
×

PowerPoint download

203 views
149 views

Published on

Published in: Technology, Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
203
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
4
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

PowerPoint download

  1. 1. Talk Back Live Maximizing Your Collection Agency Partnership J. Christopher Lang Linebarger Goggan Blair and Sampson, LLP Carl Perry ACS – Aman Collection Service Don Taylor Account Control Technology, Inc
  2. 2. RFP Process <ul><li>Writing your RFP. </li></ul><ul><ul><li>Allow sufficient time - 6-9 months </li></ul></ul><ul><ul><li>Canvas the marketplace for new ideas and concepts. Seek input from others. </li></ul></ul><ul><ul><li>Define your objectives and goals. </li></ul></ul><ul><ul><li>Clear simple format, easy to read. </li></ul></ul>
  3. 3. RFP Process <ul><li>Scheduling </li></ul><ul><ul><li>Allow a minimum of 45 days for the response. </li></ul></ul><ul><ul><li>Allow a minimum of 15 days after questions are answered. </li></ul></ul><ul><ul><li>Set the due date at the end of a week to allow for mailing </li></ul></ul>
  4. 4. RFP Process <ul><li>Prequalify potential bidders </li></ul><ul><li>Pro & Con of this recent trend </li></ul><ul><ul><li>Limits response to qualified firms </li></ul></ul><ul><ul><li>Financial stability of bidder and all parent companies. </li></ul></ul><ul><ul><li>Third party servicer requirements. </li></ul></ul><ul><ul><li>Determine minimum experience requirements. </li></ul></ul><ul><ul><li>State Licensing - require proof </li></ul></ul><ul><ul><li>Industry Involvement - memberships </li></ul></ul>
  5. 5. RFP Process <ul><li>Question and Answer Period </li></ul><ul><ul><li>Set a deadline for the questions and when the response will be provided. </li></ul></ul><ul><ul><li>Anticipate the questions in advance and include data in the RFP. </li></ul></ul><ul><ul><li>Allows clarification to receive the best quality response. </li></ul></ul><ul><ul><li>Require standard format for the questions. </li></ul></ul>
  6. 6. RFP Process <ul><li>Pre-bid Conference </li></ul><ul><ul><li>Pro - Con of timing. </li></ul></ul><ul><ul><li>Mandatory or optional </li></ul></ul><ul><ul><li>Request questions in advance </li></ul></ul><ul><ul><li>Allows clarification to receive the best quality response. </li></ul></ul>
  7. 7. RFP Process <ul><li>Fee Structure - </li></ul><ul><ul><li>Fixed vs. Bid fees </li></ul></ul><ul><ul><li>Fixed - determine market rate and incentives to perform </li></ul></ul><ul><ul><li>Bid - set range as to what will get the desired result </li></ul></ul><ul><ul><li>Assess your internal effort vs. what volume and quality will be outsourced. </li></ul></ul><ul><ul><li>You get what you pay for. </li></ul></ul>
  8. 8. RFP Process <ul><li>Reference Data </li></ul><ul><ul><li>Request reference data in desired format </li></ul></ul><ul><ul><li>Limit the number of references </li></ul></ul><ul><ul><li>Talk to the references to discuss performance. </li></ul></ul>
  9. 9. RFP Process <ul><li>Staffing and Experience </li></ul><ul><ul><li>Individual vs. Corporate Experience. </li></ul></ul><ul><ul><li>Sufficient staffing to service the contract. </li></ul></ul><ul><ul><li>Reputation of the staff. </li></ul></ul><ul><ul><li>References on the key individuals </li></ul></ul>
  10. 10. RFP Process <ul><li>Other Suggestions </li></ul><ul><ul><li>Limit the number of pages in the response. </li></ul></ul><ul><ul><li>Standby awards in case winners fail </li></ul></ul><ul><ul><li>One bidder per entity or parent </li></ul></ul><ul><ul><li>Address mergers or acquisitions </li></ul></ul><ul><ul><li>Capability of the bidder to succeed - review other business commitments </li></ul></ul><ul><ul><li>Require association membership </li></ul></ul>
  11. 11. RFP Process <ul><li>What about the proposal content? </li></ul><ul><ul><li>Know your audience, do they want </li></ul></ul><ul><ul><li>fluff or fact? </li></ul></ul><ul><ul><li>Do they want graphs or answers, </li></ul></ul><ul><ul><li>color or clarity? </li></ul></ul><ul><ul><li>Did I answer the question? If I can’t answer the question, what do I do? Add puffery? </li></ul></ul>
  12. 12. RFP Process <ul><li>Who can win? </li></ul><ul><ul><li>Who are the incumbents? </li></ul></ul><ul><ul><li>What are the current recoveries? </li></ul></ul><ul><ul><li>What is the current level of service? </li></ul></ul><ul><ul><li>What are the current rates? </li></ul></ul><ul><ul><li>What are the requirements? </li></ul></ul><ul><ul><li>Who is going to review? </li></ul></ul>
  13. 13. RFP Process <ul><li>What do we win? </li></ul><ul><ul><li>How many placements? How often? </li></ul></ul><ul><ul><li>Are there performance bonuses? What </li></ul></ul><ul><ul><li>are the bonuses? </li></ul></ul><ul><ul><li>What do we win? Is there a reward for working all categories? </li></ul></ul><ul><ul><ul><li>FFELP consolidation </li></ul></ul></ul><ul><ul><ul><li>Direct consolidation </li></ul></ul></ul><ul><ul><ul><li>Rehabilitation </li></ul></ul></ul><ul><ul><ul><li>Front line collections </li></ul></ul></ul><ul><ul><ul><li>Administrative wage garnishment </li></ul></ul></ul>
  14. 14. RFP Process <ul><li>When do we start? End? </li></ul><ul><ul><li>What is the contract period? </li></ul></ul><ul><ul><li>Are there renewal provisions? </li></ul></ul><ul><ul><li>What about inventory that is repayment at the end? </li></ul></ul>
  15. 15. RFP Process <ul><li>Why would they choose me? </li></ul><ul><ul><li>Have I dotted the i’s and crossed </li></ul></ul><ul><ul><li>all the t’s? </li></ul></ul><ul><ul><li>Have I answered all the questions? </li></ul></ul><ul><ul><li>Is the bid easy to read? Does it </li></ul></ul><ul><ul><li>look professional? </li></ul></ul><ul><ul><li>Do you hand deliver? </li></ul></ul>
  16. 16. RFP Process <ul><li>How can I set myself above the competition? </li></ul><ul><ul><li>References are key in this area. </li></ul></ul><ul><ul><li>Current performance if you are an incumbent </li></ul></ul><ul><ul><li>Customer service provided to the guarantor and the student </li></ul></ul><ul><ul><li>Recovery rate and netback collections percentages </li></ul></ul><ul><ul><li>Rate? This is one of the weakest evaluations, and yet it is used too often. </li></ul></ul>
  17. 17. Rates – Why are rates so important? <ul><li>Rate structures are a primary factor in overall performance. </li></ul><ul><li>Contractors must invest resources up front with no monetary assistance from clients. </li></ul><ul><li>Rates are the single source of revenue for Collection contractor. </li></ul><ul><li>Rates are a blend of Regular, AWG, Consolidations and Rehabilitations. </li></ul>
  18. 18. Rates – Speaking of Performance, what do you really get with a low bid? <ul><li>Rates are a major factor that drives performance. </li></ul><ul><li>Revenues generated permit contractors to continue to invest in personnel and tools for the success of the contract. </li></ul><ul><li>Rates can be a “self-fulfilling prophecy of success or failure. </li></ul>
  19. 19. Rates – The “Net Back” Principle <ul><li>LOW BID </li></ul><ul><li>Placement $1,000,000 </li></ul><ul><li>Recovery % 17% </li></ul><ul><li>Total Collected $170,000 </li></ul><ul><li>Retention 24% </li></ul><ul><li>GA Revenue $40,800 </li></ul><ul><li>Rate (Fee) 10% </li></ul><ul><li>CA Revenue $17,000 </li></ul><ul><li>Net Back to GA $23,800 </li></ul><ul><li>REALISTIC BID </li></ul><ul><li>Placement $1,000,000 </li></ul><ul><li>Recovery % 23% </li></ul><ul><li>Total Collected $230,000 </li></ul><ul><li>Retention 24% </li></ul><ul><li>GA Revenue $55,200 </li></ul><ul><li>Rate (Fee) 13% </li></ul><ul><li>CA Revenue $29,900 </li></ul><ul><li>Net Back to GA $25,300 </li></ul>
  20. 20. Rates – OK, but what about State Agencies that must use low bid? <ul><li>Evaluation criteria can place heavier emphasis on Technical portion of proposal. 80% Technical points and 20% pricing instead of 50 – 50. </li></ul><ul><li>Set Ranges so that pricing does not go below a level that impact performance. </li></ul><ul><li>ED sets target rate. </li></ul>
  21. 21. Rates – How would you suggest a fair rate be established? <ul><li>Review past history </li></ul><ul><ul><li>Recovery percentage compared to rate charged </li></ul></ul><ul><li>Survey “like” agencies to see what they charge </li></ul><ul><li>Determine Recovery Strategy </li></ul><ul><ul><li>Consolidations vs. Rehabilitation vs. Regular </li></ul></ul><ul><ul><li>Consider the numbers </li></ul></ul><ul><ul><ul><li>Contractors to receive awards </li></ul></ul></ul><ul><ul><ul><li>Size of portfolio </li></ul></ul></ul><ul><ul><ul><li>Account distribution </li></ul></ul></ul>
  22. 22. Rates – What are the differences between In-house and Outsourcing? <ul><li>COSTS </li></ul><ul><ul><li>Hiring – salary, benefits, incentives </li></ul></ul><ul><ul><li>Training </li></ul></ul><ul><ul><li>Management </li></ul></ul><ul><ul><li>Overhead – equipment, space, etc. </li></ul></ul><ul><li>CASH FLOW </li></ul><ul><ul><li>Up front costs vs. no upfront costs </li></ul></ul><ul><ul><li>Capital outlays </li></ul></ul><ul><ul><li>Return on investment </li></ul></ul>
  23. 23. Rates – Cont. (differences between In-house and Outsourcing?) <ul><li>Tools </li></ul><ul><li>Personnel </li></ul><ul><ul><li>Turnover </li></ul></ul><ul><ul><li>Experience </li></ul></ul><ul><ul><li>Hours of operation </li></ul></ul><ul><ul><li>Staffing levels </li></ul></ul><ul><li>Performance </li></ul>
  24. 24. Rates – Cont. (differences between In-house and Outsourcing?) <ul><li>Considerations </li></ul><ul><ul><li>Volume, Quality, Age and previous effort directly impact rates. </li></ul></ul><ul><ul><ul><li>The greater portion of the portfolio taken in-house, expect higher rates from Vendors </li></ul></ul></ul><ul><ul><ul><li>Reducing the quality of accounts and increasing age also will increase rates. </li></ul></ul></ul><ul><ul><ul><li>Conversely, reducing the portfolio kept in-house opens opportunity to reduce rates. </li></ul></ul></ul>
  25. 25. Performance Evaluation – Use the KISS Method <ul><li>This is a collection contract, so recovery rate should be your primary consideration. </li></ul><ul><li>Make sure you have an “apples-to-apples” comparison. </li></ul><ul><ul><li>Assign accounts randomly. </li></ul></ul><ul><ul><li>Ensure that equal numbers of accounts with similar characteristics (age, balance) are assigned initially. </li></ul></ul><ul><ul><li>Consider using a minimum work period that a contractor must hold an account before returning. </li></ul></ul><ul><ul><li>Allow more time to work accounts initially on large placement contracts. </li></ul></ul><ul><ul><li>Use a time interval (quarterly, tri-annually) to measure results. </li></ul></ul><ul><ul><li>Measure what is important to you (e.g. Rehabilitations.) </li></ul></ul>
  26. 26. Performance Evaluation – Use the KISS Method <ul><li>Implement a rewards and penalty system </li></ul><ul><ul><li>Give most of your business to the companies that give you the greatest rates of return and give the least amount of you business to the companies that give you the lesser rates of return. </li></ul></ul><ul><ul><li>Assign more accounts and possibly pay bonuses to your top performers, thereby creating incentives to produce the maximum results. </li></ul></ul>
  27. 27. Performance Evaluation – Use the KISS Method <ul><ul><li>In order to better maximize your results, you could also use a contract-to-date measurement to determine who your consistent top performers are over time (similar to the Education contract). </li></ul></ul><ul><ul><li>Long-term performance could be rewarded with additional bonuses. </li></ul></ul>
  28. 28. What To Evaluate and The Reward You Get <ul><li>Measure what is important to you. </li></ul><ul><li>Rewards and Incentives need to be consistent with what you want. </li></ul><ul><li>Frequently share and distribute evaluations to maximize competitive results and performance. </li></ul><ul><li>Periodically review performance measurements to validate they are consistent with overall goals and objectives. </li></ul>
  29. 29. AWG – What are some of the benefits to using Collection Agencies to assist in AWG? <ul><li>Provides continuity in the collection process </li></ul><ul><li>Risks associated with AWG diligence are shared by the contractor. </li></ul><ul><li>Cost of hearings are borne by the contractor. </li></ul><ul><li>Administrative cost reduced to GA’s </li></ul>
  30. 30. AWG – What are some of the benefits to using Collection Agencies to assist in AWG? <ul><li>Improved performance </li></ul><ul><li>Prompt follow through with enforcement lends credibility to process. </li></ul><ul><li>Encourages borrowers to keep repayment commitments to contractors. </li></ul>
  31. 31. Default Aversion– How can a Collection Agency assist in Default Aversion? <ul><li>Supplement GA Activities </li></ul><ul><li>Improve Performance </li></ul><ul><li>Provide additional services </li></ul><ul><ul><li>Extended hours </li></ul></ul><ul><ul><li>Personnel incentives for performance </li></ul></ul><ul><ul><li>Skiptracing assistance </li></ul></ul><ul><ul><li>Expand GA’s ability to contact </li></ul></ul><ul><ul><li>Performance based pricing </li></ul></ul>
  32. 32. Default Aversion – (cont.) Are there any other benefits? <ul><li>The same benefits can apply between in-house vs. outsourcing </li></ul><ul><ul><li>COSTS </li></ul></ul><ul><ul><ul><li>Hiring – salary, benefits, incentives </li></ul></ul></ul><ul><ul><ul><li>Training </li></ul></ul></ul><ul><ul><ul><li>Management </li></ul></ul></ul><ul><ul><ul><li>Overhead – equipment, space, etc. </li></ul></ul></ul><ul><ul><li>CASH FLOW </li></ul></ul><ul><ul><ul><li>Up front costs vs. no upfront costs </li></ul></ul></ul><ul><ul><ul><li>Capital outlays </li></ul></ul></ul><ul><ul><ul><li>Return on investment </li></ul></ul></ul>
  33. 33. Default Aversion – (cont.) Are there any other benefits? <ul><li>Tools </li></ul><ul><li>Personnel </li></ul><ul><ul><li>Turnover </li></ul></ul><ul><ul><li>Experience </li></ul></ul><ul><ul><li>Hours of operation and Staffing </li></ul></ul><ul><li>Performance </li></ul>
  34. 34. Special Acknowledgments to the following: Ken Player, NCHELP for moderating the session Rick Sykora, Oklahoma Guaranteed Student Loan Program for coordinating the session Chris Crissman, Diversified Collection Services, Inc for providing additional information for the session
  35. 35. THANK YOU From Our Panel! J. Christopher Lang Linebarger Goggan Blair and Sampson, LLP Carl Perry ACS – Aman Collection Service Don Taylor Account Control Technology, Inc

×