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Collections Strategies in Changing Economic Times

Is yesterday\'s plan preparing you for tomorrow\'s risks?

Changing Collections Strategies in Changing Economic Times

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Collections Strategies in Changing Economic Times

  1. 1. Changing Collection Strategies in Changing Economic Times This presentation is available as a full webinar with audio on our website. See the “Solutions” tab
  2. 2. In this Webinar <ul><li>In this presentation </li></ul><ul><li>New and emerging collection strategies </li></ul><ul><li>The “Art of the Collect” </li></ul><ul><ul><li>Do you know the “best practices”? </li></ul></ul><ul><li>How to overcome obstacles in execution </li></ul><ul><li>How to analyze your aged receivables </li></ul><ul><li>How to evaluate your performance </li></ul><ul><li>Warning signs of falling behind </li></ul>[email_address]
  3. 3. New and Emerging Strategies <ul><li>Enhance customer communication strategies </li></ul><ul><ul><li>Know where they are </li></ul></ul><ul><ul><li>Keep in constant communication </li></ul></ul><ul><ul><li>Probe, verify, update </li></ul></ul><ul><li>Lower the cost - use technology strategies </li></ul><ul><ul><li>Automated reminders </li></ul></ul><ul><ul><li>Auto-collect processes </li></ul></ul><ul><ul><li>Add new payment options </li></ul></ul><ul><ul><li>How Good is your Data? </li></ul></ul>[email_address]
  4. 4. <ul><li>Increase your collection horsepower without the cost </li></ul><ul><ul><li>Explore new outsourcing trends </li></ul></ul><ul><ul><ul><li>Off-shore your first party </li></ul></ul></ul><ul><ul><ul><li>Look to Hosted IVR Solutions </li></ul></ul></ul><ul><li>Know how to slice and dice the data to optimize your third party recoveries </li></ul><ul><ul><li>New portfolio strategies </li></ul></ul><ul><ul><li>Different multi-agency assignment strategies </li></ul></ul>New and Emerging Strategies [email_address]
  5. 5. Bridging the Gap <ul><li>First, get back to the basics </li></ul><ul><ul><li>Review the “Art of the Collect” </li></ul></ul><ul><ul><ul><li>7 Best Practices </li></ul></ul></ul>[email_address]
  6. 6. Best Practice #1 <ul><li>Collect before you send the bill </li></ul><ul><ul><li>Minimize your credit risks </li></ul></ul><ul><ul><ul><li>Obtain ALL needed information at time of service </li></ul></ul></ul><ul><ul><ul><li>Establish and maintain relationships with customers </li></ul></ul></ul><ul><ul><ul><ul><li>Outbound/ outreach programs that link to marketing efforts </li></ul></ul></ul></ul><ul><li>Automated or live agent? </li></ul><ul><ul><ul><li>Reward for automated payments </li></ul></ul></ul><ul><ul><ul><li>Require deposits where possible </li></ul></ul></ul>[email_address]
  7. 7. <ul><li>Identify individuals credit risk </li></ul><ul><li>The Four C’s of Credit </li></ul><ul><ul><li>CHARACTER </li></ul></ul><ul><ul><ul><li>Willingness to pay </li></ul></ul></ul><ul><ul><li>CAPACITY </li></ul></ul><ul><ul><ul><li>Ability to pay </li></ul></ul></ul><ul><ul><li>CAPITAL </li></ul></ul><ul><ul><ul><li>Financial condition </li></ul></ul></ul><ul><ul><li>CONDITIONS </li></ul></ul><ul><ul><ul><li>Current Credit </li></ul></ul></ul>[email_address] Best Practice #1
  8. 8. Best Practice #2 <ul><li>The best technique is simply to ASK </li></ul><ul><ul><li>The collection calls should be </li></ul></ul><ul><ul><ul><li>Personal </li></ul></ul></ul><ul><ul><ul><li>Immediate </li></ul></ul></ul><ul><ul><ul><li>Informative </li></ul></ul></ul><ul><ul><ul><li>Flexible </li></ul></ul></ul><ul><ul><li>Plan before you call </li></ul></ul><ul><ul><ul><li>Use records concerning the account </li></ul></ul></ul><ul><ul><ul><li>Use all sources in the organization </li></ul></ul></ul><ul><ul><ul><li>Contact the right person: the decision maker </li></ul></ul></ul><ul><ul><li>Develop your opening statement </li></ul></ul><ul><ul><ul><li>Ask for the right party </li></ul></ul></ul><ul><ul><ul><li>Identify yourself and your entity </li></ul></ul></ul><ul><ul><ul><li>State the reason for the call </li></ul></ul></ul><ul><ul><ul><li>Wait for responses – Pause </li></ul></ul></ul>[email_address]
  9. 9. Best Practice #2 <ul><li>Plan the approach </li></ul><ul><ul><li>Be clear with planned questions </li></ul></ul><ul><ul><li>Give specific amounts, dates, reasons </li></ul></ul><ul><ul><li>Avoid negative phrases </li></ul></ul><ul><ul><li>Anticipate excuses </li></ul></ul><ul><li>Ask for the money </li></ul><ul><ul><li>State the facts </li></ul></ul><ul><ul><li>Ask for the balance in full </li></ul></ul><ul><ul><li>Negotiate through objections </li></ul></ul><ul><ul><li>Settle on mutually agreeable terms </li></ul></ul><ul><ul><li>Be sure of their intentions </li></ul></ul><ul><ul><li>Be ready for excuses </li></ul></ul><ul><ul><li>Involve the customer in the options </li></ul></ul><ul><ul><li>Be prepared with payment plans </li></ul></ul>[email_address]
  10. 10. <ul><li>Closing the deal </li></ul><ul><ul><li>Reiterate the commitment </li></ul></ul><ul><ul><li>Get a commitment from the customer </li></ul></ul><ul><ul><li>Agree on dates and amounts due </li></ul></ul><ul><ul><li>Confirm it in writing </li></ul></ul><ul><ul><li>Diarize for follow-up </li></ul></ul><ul><li>Tips on leaving messages </li></ul><ul><ul><li>Confirm the name of person responsible </li></ul></ul><ul><ul><li>Determine the best time to reach the person </li></ul></ul><ul><ul><li>Leave your name, organization, telephone number and request to call back </li></ul></ul><ul><ul><li>Get the name of person taking message </li></ul></ul><ul><ul><li>Always be courteous </li></ul></ul><ul><ul><li>Do not make a demand for payment </li></ul></ul>Best Practice #2 [email_address]
  11. 11. <ul><li>Don’t treat everyone the same </li></ul><ul><ul><li>Know your customer </li></ul></ul><ul><ul><ul><li>Understand the size and type of account </li></ul></ul></ul><ul><ul><ul><li>Understand the level of risk and tolerance </li></ul></ul></ul><ul><ul><li>Keep in constant communication with your customers – know where they are! </li></ul></ul><ul><ul><ul><li>IVR messages that include sales promos </li></ul></ul></ul><ul><ul><ul><li>Regular direct mailers that track returned mail back to collection departments </li></ul></ul></ul><ul><ul><ul><li>Outbound calls that welcome feedback </li></ul></ul></ul>Best Practice #3 [email_address]
  12. 12. <ul><li>The earlier the effort - the better the return </li></ul><ul><ul><li>Watch the warning signs </li></ul></ul><ul><ul><ul><li>Returned mail, no forwarding address </li></ul></ul></ul><ul><ul><ul><li>Broken promises of payment </li></ul></ul></ul><ul><ul><ul><li>Messages ignored </li></ul></ul></ul><ul><ul><ul><li>Changes in payment habits </li></ul></ul></ul><ul><ul><ul><li>Customer changes banks </li></ul></ul></ul><ul><ul><ul><li>Partial Payments or post dated checks </li></ul></ul></ul><ul><li>Enjoy Early Bird Success </li></ul><ul><ul><li>Keep in contact with your customers </li></ul></ul><ul><ul><li>Initiate billing immediately </li></ul></ul><ul><ul><li>Establish monthly cycles </li></ul></ul><ul><ul><li>Initiate contact before the delinquency occurs </li></ul></ul>Best Practice #4 [email_address]
  13. 13. Best Practice #5 <ul><li>Be CREATIVE </li></ul><ul><ul><li>Make your request stand out in the stack! </li></ul></ul><ul><li>Creativity Pays </li></ul><ul><ul><li>Return envelopes </li></ul></ul><ul><ul><li>Coupon books </li></ul></ul><ul><ul><li>News articles/newsletters </li></ul></ul><ul><ul><li>Technology </li></ul></ul>[email_address]
  14. 14. <ul><li>You have to find them first! </li></ul><ul><ul><li>Be inventive - be Sherlock Holmes </li></ul></ul><ul><ul><li>Get access to who might have information </li></ul></ul><ul><ul><li>Look for free or inexpensive sources </li></ul></ul><ul><ul><li>Look for other sources of information </li></ul></ul>Best Practice #6 [email_address]
  15. 15. <ul><li>How to collect returned checks </li></ul><ul><ul><li>Repayment in cash/money order </li></ul></ul><ul><ul><li>No second chances </li></ul></ul><ul><ul><li>Service charges </li></ul></ul><ul><ul><li>Keep a history/warning signs </li></ul></ul><ul><li>Consider NSF collection by ACH (USA) </li></ul><ul><ul><li>Statistics show a 20% increase in collections </li></ul></ul><ul><li>Use direct withdrawals (PAP) in Canada </li></ul>Best Practice #7 [email_address]
  16. 16. <ul><li>Make it easier to pay </li></ul><ul><ul><li>Automate your communications </li></ul></ul><ul><ul><ul><li>Change of information IVR notifications </li></ul></ul></ul><ul><ul><ul><li>Early IVR reminder notices </li></ul></ul></ul><ul><ul><ul><li>Auto-collect calls with immediate payment options </li></ul></ul></ul><ul><ul><li>Increase your payment options </li></ul></ul><ul><ul><ul><li>Accept Credit Cards </li></ul></ul></ul><ul><ul><ul><li>Accept electronic payments </li></ul></ul></ul><ul><ul><ul><li>Accept Off-site Payments </li></ul></ul></ul>Best Practice #7 [email_address]
  17. 17. Overcoming Obstacles to Execution <ul><li>Overcome obstacles to execution </li></ul><ul><ul><li>Re-enforce the basics </li></ul></ul><ul><ul><li>Review and understand what reports are telling you </li></ul></ul><ul><ul><li>Understand the trends </li></ul></ul><ul><ul><li>Challenge existing practices </li></ul></ul><ul><ul><li>Benchmark results with third parties </li></ul></ul><ul><ul><li>Test new technology options and benchmark performance </li></ul></ul>[email_address]
  18. 18. Analyzing Your Aged Receivables <ul><li>Is your portfolio health strong or starting to weaken? </li></ul><ul><ul><li>Recent trends in all markets suggest that economic impacts are already being felt on portfolios. </li></ul></ul>[email_address] From Capital One’s annual financial review. These figures relate to the 30+ days delinquent indicator for their US card portfolio. 4.78% Q4 – 2008 4.20% Q3 – 2008 3.85% Q2 – 2008 4.04% Q1 – 2008 Delinquency Rate Quarter
  19. 19. Evaluating your Performance <ul><li>Here are some benchmarks you should be achieving today </li></ul><ul><ul><li>Small balance – Consumer </li></ul></ul><ul><ul><ul><li>First Party </li></ul></ul></ul><ul><ul><ul><ul><li>Collectors should have a minimum of 120 calls and 20 conversations per day </li></ul></ul></ul></ul><ul><ul><ul><ul><li>2.25 hrs talk time (manual environment) </li></ul></ul></ul></ul><ul><ul><ul><li>Seconds and Thirds </li></ul></ul></ul><ul><ul><ul><ul><li>Collectors average 100 calls and 9 conversations per day </li></ul></ul></ul></ul><ul><ul><ul><ul><li>1.5 to 2.25 hours of talk time (manual environment) </li></ul></ul></ul></ul><ul><ul><li>High Balance – Consumer </li></ul></ul><ul><ul><ul><li>First Party </li></ul></ul></ul><ul><ul><ul><ul><li>Collectors should have a minimum of 120 calls and 15 conversations per day </li></ul></ul></ul></ul><ul><ul><ul><ul><li>1.5 to 2.25 hours of talk time (manual environment) </li></ul></ul></ul></ul>[email_address]
  20. 20. Warning Signs of Falling Behind <ul><li>No cost effective process for communicating with your customers </li></ul><ul><ul><li>Consider cost effective outbound calling campaigns </li></ul></ul><ul><li>No access to technology and/or CapEx is impossible to secure </li></ul><ul><ul><li>Look to hosted Solutions </li></ul></ul><ul><li>Not enough resources </li></ul><ul><ul><li>Consider consulting or external assistance </li></ul></ul><ul><li>When cost of recovery must be decreased </li></ul><ul><ul><li>Explore off-shoring or new technologies </li></ul></ul><ul><li>Results are not meeting plan </li></ul><ul><ul><li>Change your portfolio or assignment strategies </li></ul></ul>[email_address]
  21. 21. COMING SOON Thank you for your interest. Feedback and questions may be sent to: [email_address] This presentation is available as a full webinar with audio on our website. See the “Solutions” tab