Debt collection is a tough field. It takes a robust spirit to see the matter through. Though we have a clear objective, the road is not level and smooth. As there is both money on the table and resistant debtors in the chairs, to be successful, we as collectors need a careful strategy. When approaching each account before the journey even begins, we are reminded of the words of Gene Kranz, the flight director of Apollo 13; “Let’s work the problem, people.”  

From Over-Dunn to Well-Dunn:

A Win-Win Consumer-centric Approach Rooted in Compassionate Communication

Even though not everyone may have a favorable view of debt collection agencies, the fact is, they perform a vital service that keeps costs down and maintains client relationships. Before you take inventory and decide whether hiring an agency is the right move for your business, consider all the ways in which using collections is the smarter and more efficient move for you and your business.

Have you ever asked yourself, just what exactly does a debt collection service do and how does it work? Well then, you’re in luck! We’ve outlined the most common topics about how agencies operate, why we need them, to the evolution and future of the debt collection industry.

Any business that can’t adapt with the times is going to suffer. Technology has revolutionized how consumers and companies communicate and conduct business. The old standard of phone calls and paper bills has become a relic of the past. It’s time to get current and streamline your operations as well as increasing customer satisfaction. Using email to communicate and collect payment is a win-win that empowers consumers as well as increasing collection revenue and positive outcomes.

At some point you may have asked yourself exactly what debt collection agencies do and how they work. A debt collection agency is the entity that employs debt collectors tasked with recovering late or missed payments. Often these agencies are the “middlemen” who recover funds for the original creditors and lenders. Their overall objective is to legally recover debt while abiding by federal and state laws. There are different types of collection agencies which specialize in different amounts and types of collection. 

The paradigm of customer preferences has shifted in recent years. It should be no surprise that these digital preferences in other industries, such as online shopping, would eventually carry over into others. Using digital channels to collect debts is by no means a novel idea, but it has presented a challenge for many businesses to implement. However, with the passage of Regulation F and constantly emerging technologies, the debt collection sector is undergoing a digital shift in its operations. Research shows that customers prefer digital engagement, making payments with the tap of a button, and self-service options that can be handled when the timing is convenient instead of phone calls they don’t have time to answer. The great thing about incorporating more technology into debt collection practices is that it is a win-win for customers and collectors alike. It permits more efficient workflows and grants more flexibility in communication. Digital debt collection uses text, email, and other digital means such as chatbots and applications to send outgoing and receiving incoming communication from consumers.

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.

1. Using a collection agency is too expensive.
   The benefits of using a collection agency far outweigh the costs associated with them, as long as you are working with an agency that has a high recovery rate. Companies that spend months and sometimes years trying to collect on old accounts are often just spinning their wheels. Agencies with long histories of success can collect quicker and easier than you ever thought possible, turning your aged receivables into bottom-line revenue.
2. Collection agencies only work on very old accounts.
   Collection activity goes through many phases. Outsourcing receivables, for instance, is the process of using a collection agency partner to do a “soft-touch” method of collections that may simply be calling a client on day 31 and giving them a gentle reminder that their bill is due. This outsourcing activity may last 30, 60, 90 days or longer until it is moved into a more traditional collections process that involves letters, more frequent phone calls, texts, emails, voicemails, and other collection efforts. From there, agencies will work with their clients to score and sort bad debt, and eventually move on to litigation, if necessary.
3. A collection agency will just upset my customers, or my patients, and I’ll get a bad reputation.
   Threats and abusive language is prohibited by federal law, and any agency engaging in such activity will face severe consequences. The best agencies recognize that they are ultimately the face of the business they represent, and as that agent, they should be conscientious of the fact that the customer or patient will associate their activity with the businesses they serve. It does not behoove a collection agency to damage relationships with the customers of their clients.
4. Collection agencies do not want to work with a small business.
   Many collection agencies such as Account Resolution Team, understand the value of small businesses and the positive impact that they have on our communities. Our economy thrives on small and large businesses. Collection agencies that embrace their small business partners have deeper relationships with the businesses that they serve in those same communities.
5. All collection agencies are the same.
   In reality, collection agencies vary as much as any business in any industry, just as no two doctor’s offices, restaurants, or banks are exactly the same. Some agencies charge monthly fees, others are contingency-only. What is most important though, is that you choose an agency that has a longstanding history of success and very high recovery rates.
6. Collection agencies cannot find clients that change their address and phone number multiple times.
   While this is certainly true with some agencies, it isn’t a fact for those of us with the latest innovations in technology. Account Resolution Team was instrumental in the development of the leading debt collection software in North America.
7. When it comes to collection agencies, meaner is better.
   Showing empathy, validating fears, providing support, and building trust have not always been core objectives for many collection agents. For this reason, consumers often respond to collections communications negatively as they are already on-guard before the framework of the solution can be established. Account Resolution Team understands this level of heightened human need and takes steps to promote kindness during the collections process.
8. It is not worth the time it takes to get a collection agency all of my accounts.
   This is the prime reason that technology plays a critical role in the adaptation of late accounts into a system. For Account Resolution Team, gone are the days when mass uploads required manual entry into a system. By utilizing state-of-the-art technology, accounts can be loaded immediately into the system, streamlining the process that begins collecting accounts to turn aged receivables into bottom-line revenue.

For more information on how Account Resolution Team can help YOU get your money, call 423-586-7613 or visit www.accountresolutionteam.com

Did you know that 61% of consumers have been negatively impacted by COVID-19? The greatest increase in bad debt began in March 2020, and as a result, the largest phase of third-party collections is estimated to begin in October of 2020, extending well into 2021.