Automating debt collection is a helpful process that can help you break away from the administrative requirements and legal issues that come with responsibly collecting on past-due accounts. That said, it can be a painstaking effort if you plan on doing everything in-house.
In this article, we’ll be looking at the key automation processes you need to be giving special attention to. One slip-up can be the difference between lost revenue or clearing those delinquencies once and for all.
A roadblock to debt recovery is having outdated information on the borrower. The longer you go without establishing contact, the harder it is for you to get the money you’re owed from a legal standpoint.
Even worse, you could find yourself contacting the wrong parties and having complaints filed against your company. Debt collection agencies utilize customer relationship management software as a strategy to keep tabs on outstanding balance payment activity and even monitor social networks to ensure they’re only contacting the actual debtor.
DPD stands for “days past due.” Obviously, the longer the DPD is, the harder it will be to collect on a debt.
Establishing a system for DPD helps your team know which accounts to pursue more aggressively. Ideally, you’ll want to make contact and take any necessary legal steps to collect on accounts with a DPD less than 90 days. If accounts age past this time the chances of successful recovery can drop by 50%.
Another key step to take in the debt collection automation process is to index each message that we receive from your borrowers. If your company also tracks this internally, you can do this in a number of ways:
- Promises to pay
- Partial payment submitted
- No contact established
Indexing every message gives our debt collection team the tools they need to work within the Fair Debt Collection Practices Act (FDCPA). You enable them to continue the conversation with those willing to and in the process of paying. You also help them to target efforts on finding the right contact information.
Giving your borrowers more ways to pay can establish a more predictable pattern of payments. More people are sending money through nontraditional methods, such as Cash App, Venmo, PayPal, and ApplePay.
Meeting your borrowers where they are and making the payment process convenient is essential to automating debt collection. If you’re still doing checks and traditional credit cards only, consider adding and integrating digital payments to the workflow.
These days, we stay tethered to our phones. It’s created constant contact with the outside world, but it’s also tugged us in many directions. Your borrowers are no different.
Using the criteria mentioned above, you can create and automate payment reminders to go out at regular intervals within FDCPA law. This will ensure that borrowers willing to pay don’t let due dates go unnoticed. It also establishes a pattern of responsible collection tactics that you can use to pursue legal action should it ever come to that.
We’ve discussed some automation techniques that can prove helpful in collecting what you rightfully deserve. You’ve made note of the major parameters that you need to be tracking. To review, those are:
- Accurate borrower information
- Days past due
- Messages regarding account activity
- More ways to pay
- Responding to borrowers with relevant reminders
That’s a strong workflow for automating the debt collection process. It’s up to you to figure out how you’re going to do it. It could take learning, operating, and integrating several pieces of software to get right. Or, you can consider:
Outsourcing Workflow Processes
Working with a debt collection agency is the easiest way to get all these services under one roof. It also eliminates the learning curve and allows you to re-focus on your business.
Of course, it helps to be familiar with these processes ahead of time and to establish clear metrics that you can use to verify the effectiveness of the agency. The main metric to focus on is receivables-versus-outstanding debt. You should also monitor contacts established between the agency and your borrower.
Automation of Debt Collection Works to Your Advantage
Whether you are automating the process on your own or using a debt collection agency like Southwest Recovery Services, it helps to remove as many manual actions as you can. The benefits include keeping your most valuable accounts from slipping through the cracks, establishing value in accounts that otherwise would or have gone delinquent, and ensuring legal compliance in your pursuit of debt recovery.
Would you rather focus on the core competencies of your business than chasing entities for getting the payments you’ve already earned? Reach out to us today, and we’ll walk you through the process.