How well are you currently managing collections? Are collections efforts taking up an increasing amount of your budget? If so, consider outsourcing collections to an organization that uses the latest software and proven techniques to minimize collections management risk.
Improvements in account servicing software now provide actionable insight into collections management risks and guidance for more efficient collection and recovery. Let’s explore how these capabilities offered by an experienced collections management servicer can reduce your collections management risk.
Multi-Tiered Collections Strategy
Careful analysis using machine learning and artificial intelligence reveals underlying attributes and patterns that can be used to develop collection strategies that result in more effective collections operations. Analysis can be used to:
- Identify accounts likely to default, or determine potential defaults by region;
- Predict the probability of customer defaults or remaining longer in delinquency;
- Prioritize customers based on the account value at risk;
- Determine the contact methods or channels most likely to achieve results; and
- Incorporate predictive models to better anticipate customer behavior.
A multi-tiered process based on borrower attributes and delinquency stages uses collection treatment plans tailored to each stage. Proactive techniques based on predictive analysis can mitigate risk and prevent defaults. All stages of the collection process are automated based on best practices, using decision rules and workflows to increase efficiency and comply with federal and state regulations.
Tier 1: Missed Payments
Action at this stage is most effective in diagnosing the reason(s) for the missed payments and for getting the borrower back on track.
- Determine if early delinquency or default is likely the result of lending fraud. If so, go directly to tier 4 activities.
- Verify the accuracy of contact and account information and correct it when necessary.
- Contact, educate, and coach borrower regarding payment options.
The account servicing software platform ensures that borrower and account information is securely maintained and available to all members of the account servicing team.
Want to find out more about our software and services? Contact our team today.
Tier 2: Early Stage Collections
Concerted efforts at this stage use software and predictive performance models to direct the focus of specific activities. Those activities may include:
- Dialer technology matched with account-level treatments designed to mitigate losses;
- Determine the communication channel(s)—voice, e-mail, text, webchat, post—most likely to elicit a positive response; and
- Conduct light skip tracing to locate borrowers and facilitate payments.
A comparison of borrower attributes against predictive models at this stage helps to select the communication techniques and channels with a higher probability of achieving the desired results.
Tier 3: Mid-Stage Collections
At this stage, additional data sources and historical analysis of defaults support a more concerted effort to stave off potential losses. Alternative data obtained through in-depth skip tracing efforts, analysis of account attributes, and behavioral scoring models are used to segment delinquent accounts, determine the appropriate treatments, and drive dialer workflows.
Tier 4: Late-Stage Collections
Persistent delinquency (or outright fraud) leads to the threshold where legal processes are initiated. Data acquired and updated throughout the previous stages drive the repossession and settlement processes. Via a country-wide integrated network of forwarders, initiate a streamlined repossession process and provide automated, regular updates to monitor progress and resolution.
As an essential component of the account servicing software platform, workflows ensure collections and repossessions procedures comply with all relevant federal and local regulations such as Reg Z, Servicemembers Civil Relief Act, Unfair Deceptive and Abusive Acts and Practices, Telephone Consumer Protection Act, and State Debt Collection.
Minimize Collections Management Risk With Software and Skills
An experienced collections management organization uses the latest innovations in data sources, analytics, and compliance best practices to maximize recovery. Covering the full spectrum of collections issues from initial delinquencies to complex repossessions, a modern account servicing platform gives customer servicing professionals the tools and information needed to mitigate collections management risk.
defi SOLUTIONS provides configurable loan origination systems, loan management and serving, analytics and reporting, and a wide range of technology-enabled BPO services. If collections management risk is on the rise, take the first step in realizing the benefits of modern account servicing software and experience collections professionals. Contact our team today.
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