How efficiently are you managing collections?
Unlike the lease or loan origination process which is comparably quick and predictable, the collections process can involve all manners of complexity—fraud, unemployment, bankruptcy, repossession—which can be time-consuming and require really experienced collections professionals to efficiently execute these tasks and maximize recovery.
If your answer to the aforementioned question has uncovered some pain points in your current collections processes, you can bring greater efficiency to that part of the lending cycle by outsourcing the collections process to experienced professionals.
Below we offer three reasons why outsourcing the collections process makes economic sense, helping you to lower your collections costs while increasing the recovery rate.
#1: Cost-Saving Opportunities
Outsourcing the collection process brings three immediate benefits. You no longer have to:
- Worry about finding, hiring, and training staff.
- Manage the IT resources and systems that support the collections process.
- Wrestle with adding staff, hardware, and software to cope with increasing collections requirements, nor release these resources when collection requirements decline.
Each of these improvements can bring cost savings. You reduce staffing expenses, IT infrastructure and maintenance costs, and—depending on the size of your collection department—needed office space. For many auto lenders, the cost savings is reason enough to outsource the collections process.
#2: Resources and Continual Investments to Boost Efficiency
Established collections outsourcing providers are far more efficient in every aspect of the process. Why?—they have the resources, experience, and ability to continually invest in improving systems and processes to boost efficiency throughout all areas of the collections process. They:
- Employ collections agents with nothing less than ample experience, ensuring they’re never short-staffed if an employee is ill or on vacation.
- Invest in a variety of technology, including telephony and dialer, contact center systems, decision rules and workflows, fraud detection, predictive analytics, and cloud-based information sources to facilitate timely collections.
- Integrate with external services such as bankruptcy monitoring that will provide automatic notifications for accounts filing for bankruptcy, as well as updates on relevant bankruptcy activities.
- Have compliance controls built into the systems to ensure collections processes comply with CFPB, FFIEC, and state regulations.
An established collections provider is far better positioned to invest in staffing, technologies, and innovative services to continually enhance collections efficiency while complying with the complexities of federal and state regulations.
#3: Focus Solely on Collections
The staff in your lease and loan servicing organization may be required to wear many hats, collections being just one of them. That makes it difficult to stay focused and be efficient in any one activity or process. An established collections provider is focused on one thing—collections. Every process, task, and interaction with borrowers is designed to shorten the collections cycle and increase your collections success rate. To achieve these goals, the best auto loan collections providers:
- Employ predictive analytics to identify borrowers who are likely to experience financial stress.
- Execute outbound campaigns proactively to reduce losses well before an account defaults.
- Contact borrowers when they are most likely to answer—often evenings and weekends.
- Demonstrate patience and courtesy, even in the most complicated situations, and employ proven best practices to shorten the collection cycle.
- Track and manage delinquent accounts using specific rules within defined workflows.
- Utilize a multi-tiered process, based on delinquency stage, that applies specific account-level treatment plans to shorten the collections cycle.
The best outsourcing collections providers will adapt their processes and practices to represent your brand and programs. This white-labeled, end-to-end collections management provides a seamless borrower experience that enables you to focus on your core business.
Achieve Better Results by Outsourcing the Collections Process
When you outsource the collections process to an established and experienced provider, you’ll not only reduce your collections costs, but you’ll also increase your collection rate. When you consider the measurable advantages of outsourcing mentioned above, auto lenders who have been looking to improve their collections processes should seriously consider outsourcing.
Getting Started
defi SOLUTIONS has been helping auto lenders collect more and minimize losses for well over 30 years. We have developed and refined proven processes to shorten collection cycles. Whether you’re servicing prime, near-prime, or subprime loans or leases, we have the experience and expertise to manage your collections. Contact our team today to learn why outsourcing the collections process with defi MANAGED SERVICING will produce proven results.
