In the debt collection industry, customer retention is a key component to measuring success. For example, a bad collections experience can push debtors towards competitors and even affect your reputation as an agency. However, in many cases collection agencies are subconsciously viewed by the debtor as an extension of the client’s business. This means that any opinions or emotions the debtor develops towards your agency are often associated with the client’s business.
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.
Life as we know it revolves around technology. Business functions, processes, communication, information, and productivity all rely on some form of technology whether it’s your computer, cloud storage and data center, telephone, or even the software you use on a daily basis. For the collections’ agency, this reliance on technology is no different. Earlier on the blog, we discussed technological needs in collections. But what we haven’t discussed is how technology has evolved the collections process. Since it first began, the art of collections has changed tremendously. Now, the collections industry relies on the use of technology to communicate, store, and analyze information like analytics, automation, and Compliance Management Systems (CMS). If you're not using an agency with the latest technological advancements in debt collection, you may even ask yourself if you're doing it wrong.
Compliance management is a disciple that can not, and should not be taken lightly no matter what industry you are in. However, when it comes to collections, it is even more pertinent to success. Over the years, new regulations and compliance policies are enforced and/or amended, differentiating the way agencies collect and emphasizing the need for adaptation. Although collectors are legally entitled to attempt to collect all owed debts, there are restrictions on the methodology they utilize including the Fair Debt Collection Practices Act, Fair Credit Reporting Act, and Software Compliance.
Though we may not like it, debt is often a necessary part of life, meaning there's absolutely no shame in borrowing from time-to-time. Unfortunately, many people find themselves in these financial situations simply because they do not know how to handle the collection process. When this happens, debt just continues to pile up, leading to negative outcomes.
It should go without saying that unpaid debts are no fun and lead to additional stress, frustration, and problems down the road. In fact, unpaid debt could majorly impact your financial status, credit score, and future financial plans. Whether you are a debtor or lender, here's how unpaid debt can be negatively impacting you.