Times are changing, and so must collection techniques. With the Consumer Financial Protection Bureau’s “Regulation F” becoming effective December 1st, partners must adapt and optimize their practices to ensure more efficient debt recovery.
Creating debt is incredibly easy. The ability to make purchases without realistically having the money to afford them has made a very slippery slope out of many peoples’ financial situation. Derogatory marks on credit are a serious issue and once you are on that slippery slope there are many obstacles involved that keep you on it, causing you to go further into a place of financial unrest. Knowing how being in debt can affect your life is important in both preventing future slip-ups and motivating you to take action on your current unpaid debt.
For decades debt collection has relied on telephone calls and paper letters to contact and collect unpaid debts from consumers. In today’s reality, research has shown that consumers prefer to be contacted through new technology. Some methods used in digital debt collection include Email, SMS, Push Notifications, and Voicemail Drop. Some debt collection agencies may consider themselves “digital” when in actuality the only digital channel they employ is Email. While Email is a crucial collection strategy, combining it with other channels of digital debt collection creates a well-rounded multi-channel strategy.
The prospect of paying off your debt may be quite daunting. Between interest rates, minimum payments, and trying to budget, you are liable to get confused and overwhelmed. Becoming debt-free isn’t easy but it certainly is possible with the right plan that works for you.
The psychological, physical, and relationship effects from debt are detrimental. Many Americans believe that having debt is a necessary factor of life. Whether you are going to college or buying a home, having what some may call “good debt” can assist you in going further in those goals. On the other hand, medical or credit card debt has an adverse effect on your income through interest charges that can cause a chain reaction of borrowing and more debt, all while not having the same potential advantages as a business or student loan. What you may not know is the ways debt can negatively affect your life and how being debt-free can benefit you in non-financial aspects.
Any business can face financial problems that work against the effort to maintain sufficient cash flow. One dilemma that can have a significantly negative impact on your company is issues in accounts receivable. When a service is provided and your customer does not pay, meeting your bottom line becomes difficult. It is a debt collection agency’s obligation to recover your earnings so that you can continue doing business.
Don’t expect anything to go “back to normal” post COVID, and what defines as “post” still remains to be seen. Some experts say that it may be 2022 before we can safely resume old activities in some semblance as they once were. The pandemic has left its mark, not only on our physical behaviors, but our financial ones as well. In these continuing uncertain times, debts rise, layoffs continue, and there is a consistent economic downturn for many businesses. Many entities are overwhelmed with the daily tasks associated with trying to make up for lost time during the shutdown and by trying to throw collection efforts into that mix only makes your employees less productive with other tasks.
When I was 14, I started my first job as a telemarketer for a photography company. That started decades of a career in sales and marketing. My longest stint was 20 years as the National Sales and Marketing Manager for a multi-billion-dollar manufacturing company, so you can imagine that the transition to understanding the mechanics of the debt collection industry was worlds away from what I was accustomed to. The difference is that I’m not selling products anymore, I’m selling a service. I am still learning this industry every day, but the thing that puzzles me most is the mysterious disappearing client. Let me explain.
Research has revealed the potential for a global crisis such as COVID-19 to lead to chaos in the realm of economy. The impact on your customers is evident in an increased level of delayed or defaulted payments, deficiency in liquid assets, and even the bankruptcy of their businesses. These challenges are part of what make debt collection unexcused from the major disruptions to the business sector. However, we have learned that there are many ways to minimize the likelihood of your business’s cash flow deteriorating as a result of COVID-19.
Let’s talk about some of the most common responses we get when calling on new prospects. Now, before you give up on this topic from the very beginning, stick with me; it’ll be worth it. Then ask yourself this question about debt collections - are you doing it wrong?