Credit Control: Best practices for outsourcing receivables

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Credit Control: Best practices for outsourcing receivables

  1. 1. Presented by Marney MacFadyen, Vice President Sales, Credit Control, LLC Best Practices for Outsourcing Receivables
  2. 2. Overview • Outsourcing Risks • Outsourcing Benefits • The Keys to Outsourcing Success • Case Studies • Key performance requirements • Data Security • Compliance
  3. 3. Outsourcing Risks • Selecting the wrong company can : – Jeopardize member relationships  – Reduce recoveries – Expose the credit union to: • Potential data breaches • Loss of revenue  • Lawsuits – Increase burden on staff – Damage Credit union reputation
  4. 4. Outsourcing Benefits • Creates new revenue stream with low  operating costs  • Reduces compliance and technology costs • Pay only for results • Reduce or re‐deploy internal resources • Visibility and control of process without the  burden of managing the entire process • Utilize the expertise of an industry leader
  5. 5. 5 The Keys to Outsourcing Success Credit Unions • Provide accurate volume  • Clearly communicate service level expectations Outsourcing Vendor • Must be financially stable • Should have industry experience • Must be licensed in all 50 states • Strong client support
  6. 6. Case Study 1 Credit Union Program Results Item # Cost Per Credit Union  Pre‐Outsourcing  Costs  # Cost Per Outsourcing  Partner Results  Managers ($45,000 Annual + benefits at 25%) 1 $ 56,250  $        56,250  1 $ 56,250  $         56,250  Supervisors ($15.00/Hour + benefits at 25%): 2 $ 39,000  $        78,000  1 $ 39,000  $         39,000  Collectors/Admin ($12.50/Hour + benefits at 25%): 8 $ 32,500  $      260,000  0 $ 32,500  $                  ‐ Other Office Expenses*: $        90,000  $         10,000  Total FirstBank Office Expenses $      484,250  $      105,250  Outsourcing Fees (Pre‐collect) $                 ‐ $      120,000  Estimated Contingency Fees (@22%): $                 ‐ $      397,848  Total Outsourcing Costs: $                 ‐ $      517,848  Total Cash Out: $      484,250  $      623,098  Cash Generated on Overdraft Accounts $   1,320,000  $   1,808,400  Cash Generated on Loans $      480,000  $      628,800  Total Cash In: $   1,800,000  $   2,437,200  Net Cash Impact: $   1,315,750  $   1,814,102 
  7. 7. Case Study 2 Item # Cost Per Credit Union Outsourcing Costs # Cost Per Credit Control Return Manager ($45,000 Annual + benefits at 25%) 1 $ 56,250 $ 56,250 Supervisors ($15.00/Hour + benefits at 25%): 1 $ 39,000 $ 39,000 Collectors/Admin ($12.50/Hour + benefits at 25%): 2 $ 32,500 $ 65,000 Other Office Expenses*: $ 60,000 Total Credit Union Office Expenses $ 220,250 Account Outsourcing Fees (@6.50 per account): $ 13,000 Total Outsourcing Costs: $ 156,000 Total loans outstanding as of December 2012 $ 105,289,127 $ 105,289,127 Delinquency (1.8%) $ 1,895,204 $ 992,644 Increase cash back to Credit Union $902 560
  8. 8. Key Performance Requirements Operations • Manages turnover • Experienced employees • Proper employee screening   & training • Monitoring, recording, and  call analytics • Respectful of your members • Strong financial controls Client Services • Robust Onboarding  Process • Dedicated Client  Services Team • Single Point of Contact  with industry expertise • Risk Matrix for legal  escalation • Reporting/Measurement
  9. 9. Data Security SOC I  Certification ISO 27001  Certification PCI Compliance  Level Data at Rest Encryption Does your vendor protect your Credit Union from cyber  attacks and data breaches?
  10. 10. Fair Debt Collection Practices Act Consumer Credit Protection Act Consumer Financial Protection Bureau ACA Professional Code of Ethics State Regulations and Practices Federal Laws Procedures and Restraints Gramm- Leach- Bliley Act Compliance 

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