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Collection Management
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Collection Management
Here you'll find resources from leading experts on getting the most out of those involved in the collections process.
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No-Cost Collections: Too Good to Be True?
I recently received a letter from a collection agency I had never heard of. The letter contained an interesting offer. The company would collect, and it would cost us nothing, zero, zip. Why? Because the collection agency would be paid by the debtor and we would receive 100% of our money. How did this magical process work? The collection agency would charge and demand that the debtor pay interest on the debt from the date the account became past due until the date the claim was paid in full. Being something of a professional skeptic, I decided to look a bit further at the five-page letter explaining how the program works. There is an expression: "The devil is in the details." The details of this program were as follows: . . .
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Collecting After the Holidays
Merry Christmas! Happy New Year! Happy Holidays! Each year, from Thanksgiving through the New Year, people tend to be in a more festive, optimistic, cheerful, and giving mood. This is all well and good, and it would be nice if the "festive, optimistic, and cheerful" spirit remained year-round. However, the "giving" component, while well intentioned, can come back to bite a lot of people after the first of the year. "We deal with delinquencies throughout the year, but they become more frequent from December through February," notes an Ohio-based mortgage collection manager, who asked not to be identified. "Historically, January is the month when people start trying to recover from their December spending." With this understanding, the department implements a concerted effort to keep borrowers on track during these sometimes lean times. "Our goal is to stem the tide of problems in January and February, so that borrowers don't end up as foreclosure candidates later on," he explains. This article looks at their strategy for coping with tougher collections after the holidays; how they support collectors, including extra incentives they offer. . . .
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Too Aggressive Collecting?
A battered veteran of the fiercely competitive computer market, this Credit & Collections Manager friend of ours is an ardent advocate of letting customers know exactly what payment performance is expected and of confronting delinquents immediately. This article details how she handled a complaint from a customer's accounting manager about supposed aggressive and inappropriate collections by one of her collectors. . . .
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Reducing Collector Turnover
Many collection agencies have a difficult time attracting enough collectors just to keep pace with turnover. So what must agencies that are growing rapidly do? What, for example, would an agency do if it landed a contract requiring an additional 30 collectors in the next 30 days? - why this agency restricts hiring to those with experience in collections, and the two things that accomplishes
- why they look for collectors with portfolios and what that tells them
- what they look for when checking references on their applicants
- how they worked with a psychologist to develop an personality skills assessment test
- work-related benefits that attract good applicants
- a special career track they've developed, including the four levels in that program
- how they screen those who seem fit to become managers
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Customizing Collection Strategies on Business Credit Cards
Business credit card issuers deal with a wide variety of businesses in diverse industries. Furthermore, some of these businesses may be relatively new while others may be seasonal, either of which present specific challenges. So the same collection strategy doesn't work for all. That's why Advanta Bancorp. (Spring House, Pa.), an affiliate of Advanta Corporation, diversifies its collection strategies to match cardholders' businesses. - what resources Advanta uses to determines what part of its lifecycle a business is in
- When the late fee is charged
- How delinquencies are measured according to risk and what collection strategies they use depending on the risk
- variables used by their call center predictive dialers
- strategies used to script calls
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A Bonus Plan for Collectors
A veteran of 23 years in credit work, Dorothy Siegel has spent the last nine years as credit manager of Fast Memory, Inc. She is a member of the southern California chapter of the NACM, and her specialty is reconciliation of major accounts 120 days or more past due. This "Point of View" column by Dorothy looks at how she structured a bonus system to incentivize collectors to tackle their older past due items that were oustanding because of pricing errors, duplicate shipments, incorrect purchase orders, or other disputes. - How large the bonuses are
- What the results of the program have been
- What the risks are, but what control mechanisms she put in place to mitigate those risks
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Collections -- The Human Side
"Credit professionals must be 'people' people," insists Kathleen Tomlin, CCE, credit manager at Kaiser Cement Corp. (Pleasanton, Calif.). "You have to realize that when you're calling a customer for money, you're not talking to a company, an account, or a statistic. You're talking to a real person--just like you. You're asking that real person to cut you a check and mail it to you." - what techniques Tomlin uses to develop a good personal relationship with her customers
- a little, but much appreciated, gift that Tomlin brings with her when visiting customers
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Comprehensive Collector Training
While high turnover and low productivity plague much of the collection industry, the reverse is true at Remit Corporation (Bloomsburg, PA). The reason? "Our collectors enjoy what they do," replies Harry Strausser, III, president. And a key reason Remit collectors enjoy their jobs is the fact that they have been extremely well trained to do them. As a certified trainer for the American Collectors Association (ACA), Strausser has the opportunity to travel around the country and help train collection agencies in how to effectively train their collectors. "I've come to the conclusion that one of the major causes of high turnover in our industry is the fact that collectors are not adequately prepared for their jobs through training," he says. Just a few items covered in this article include... - The six topics that should be addressed in introductory training
- The secret to keeping their collectors motivated on the job and enthusiastic about each call
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The Value of Collection Training
"Society is taking an ever dimmer view of collection agencies 'spilling the beans' to third parties," notes Margaret Haynes, executive vice president of the Professional School of Collections (Phoenix, AZ) and a 25-year veteran in the profession. Lack of familiarity with the laws related to collections, especially the Fair Debt Collection Practices Act (FDCPA), is one glaring adverse consequence of inadequate collector training. And Haynes insists there are others as well: . . .
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Tips for Selling and Buying Receivables
More and more consumer creditors are selling their older receivables rather than sending them to another collection agency or writing them off. There are benefits to both buyers and sellers in these deals--and there are also risks. If you're considering selling or buying charge-offs, you'll want to consider this professional's advice. This in-depth article covers... - who's selling?five key risks of selling your receivables
- the risks of buying receivables
- five types of accounts that can be successfully sold
- the importance of evaluating your portfolio before selling
- the three basic information requirements required to raise the value of your portfolio
- four ways to evaluate the buyers
- important contract considerations, including how to structure payment
- what a receivable buyer should look for in order to ensure success
- negotiating a price - some guidelines on pricing
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Small Claims Court--A Do-It-Yourself Guide
You've heard all the promises. You've offered workable solutions. You've given all the proper warnings and issued all the proper Fair Debt Collection Practices information. Still, you haven't been paid and your patience is at its end. What's your next step? If the amount owed falls within your state's guidelines, you could take the debtor to small claims court. Here's a complete run-down of what goes on in small claims court and how you can do it yourself without hiring a lawyer... . . .
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Professionalizing Medical Collections
Outsourcing collection work may seem the only solution to medical services offices overwhelmed by unpaid bills. But outside professionals can be expensive, corrosive to patient relations, and not nearly as effective as they would lead you to believe they are. Far better to develop an in-house program like this medical consortium has. . . .
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No Shortcuts in Collector Training
Many collection departments and agencies have found success in having one or more experienced collectors conduct new employee training. But while these veterans do indeed know the ins and outs of the profession, few of them have a professional background in education, particularly adult education. George Huyler, vice president, Human Resources, for Management Adjustment Bureau, Inc. (Buffalo, N.Y.), which employees upward of 200 professional collectors, contends that truly effective training requires using trainers who have a professional background in adult education. - the differences in the way that adults and children learn, and the implications for training collectors
- the three ways adults learn
- what the first week's orientation covers - and the three ways it is communicated to new hires
- how and why mentors are such an important part of the training process, and the four characteristics they use to identify superior mentors
- specific tasks that mentors work on with their proteges
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