The document provides an overview of best practices for outsourcing receivables collections. It discusses the risks and benefits of outsourcing, as well as keys to success. Case studies show how two credit unions reduced costs and increased returns by outsourcing to Credit Control. The presentation emphasizes selecting a financially stable vendor with industry experience, strong client support, and national licensing. It also stresses the importance of accurate data, service level expectations, and compliance with numerous regulations to protect members' data and privacy.

1. Presented by
Marney MacFadyen,
Vice President Sales,
Credit Control, LLC
Best Practices for Outsourcing Receivables

2. Overview
• Outsourcing Risks
• Outsourcing Benefits
• The Keys to Outsourcing Success
• Case Studies
• Key performance requirements
• Data Security
• Compliance

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. 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
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. 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. 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. 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. 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. 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