Collection System Improves Productivity
"We were handling delinquent accounts with a manual card system, and it was limiting our growth," says Joseph Higham II, assistant vice president of the National Penn Bank (Boyertown, Pennsylvania). "The volume of our collections was already more than our staff could handle in-house and we had recently purchased an additional eight branches. "We outsourced the collection of our indirect loans, but this wasn't the solution to our problem. We needed to improve the productivity of our collectors." The bank reviewed several collection systems and settled on the CS/2000 collection system from Shaw Systems Associates, Inc. (Richmond, Virginia). With this system, the bank was able to bring all of its collection work back in-house and even take on additional accounts without adding staff. "Collectors spend less time on paperwork and more time on the phone," Higham says. "Because of this, the retail loan delinquency rate has dropped an average of 18 basis points." Too Much Paperwork
The problem with the bank's previous collection system was that it required collectors to spend a great deal of their day on clerical tasks instead of on the phone. "The cards were generated by a central system," Higham says. "When an account became delinquent for the sixteenth day, a collection card was generated and given to one of the collectors. This person would update the information on the card. Because he or she would have to go to the files and pull previous cards, this process might take a day or two. "Sometimes a card was missing," he says. "Sometimes the handwritten notes were illegible. Also, accounts were posted manually so that when a payment came in, someone had to record it, change the due date, and return the card to the file. All this time dealing with cards kept collectors from their main function--the actual collection of delinquent accounts. When a collector would begin to work an account, collection letters would have to be ordered manually and typed by the word processing unit. The whole process was inefficient and time-consuming." Enter the Collection System
"We chose our particular system because it had all the functions we needed to process our loans," Higham says. "It was suitable for high-volume collection work, and it also gave the collection manager and supervisors the ability to make changes to the system without help from MIS." The system automates much of the tedious work of the previous system by pulling information from the mainframe and preparing collection lists for the collectors. Accounts have been divided according to type of loan so that direct installment loans are on one list, first payment defaults on another, and so on. Some lists are broken down by 30, 60, and 90 days overdue. "This procedure allows one collector to concentrate on a specific type of account," Higham says. A unique pull/pin process makes it possible for managers to bypass the selection process altogether and pull an account into collection or pin an account that's already there so that it stays put as long as is necessary. Know What to Look For
This company chose this particular system because it provided the flexibility it needed and gave management increased control over the collection process. When considering collection software, pay attention to the following:
- Variety. Does the system adapt to the way your company works? You don't want to have to start from scratch just because you're automating.
- Correspondence. Does the system make it easier to correspond with debtors? Does it file away standard letters for easy access and adaptation?
- Versatility. Does the system allow information to be shared by more than one department at a time? Paper can only be in one place at any given moment. However, a good collection system will have information available to anyone with a need to know at any time.
- Training. What kind of training will your people need and does the manufacturer provide it?
- Support. Where will you turn for technical support, and how easy will it be to get changes or repairs made?
Shop carefully. Talk to a number of venders and ask them for references from customers. If possible, visit companies already using the system to see firsthand how it works and if it fits your work environment. Technology can be a great improvement over paper files--but only if you do the research necessary to choose the system that's right for you. "By reducing the need for time-consuming clerical work, collectors now make twice the number of calls in a day," Higham says. "The new system has also allowed them to get to accounts faster and to focus in on problems sooner. From a management standpoint, the new system gives us better control over what the collectors are doing each day. It's also easier to monitor performance. Thanks to this system, we're able to create productivity reports that will be used to start an incentive program to reward the good performers." Editor's Note: The above article originally appeared in the Credit & Collection Manager's Letter, a newsletter purchased by CollectionForum.com in 2006. This article originally appeared prior to 2000.
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