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Guide to Streamline your Collections Processes with Technology

by receeve
Thursday, April 21 2022

#collections

startup

Modern technology, such as cloud computing services, automation, and digital communications tools, allows companies to operate as efficiently and effectively as possible. Companies can reach more consumers than ever before while eliminating manual processes throughout their operations. 

Consider the following examples:

  1. Physical bank branches are closing down around the world—partly due to the fact that over 2 billion people now use online banking. 
  2. Netflix started out as a mail-order DVD rental service. Nowadays, its digital streaming service boasts over 209 million subscribers. 

However, some businesses still continue with outdated technology, which actively hinders their chances of success. For example, in the collections industry, many organisations are still using outdated legacy systems that are slow, keep data in silos, and require too much manual effort from agents. 

Let’s examine the current challenges that collections leaders face before explaining how implementing modern digital collections software can help.

The current challenges collections leaders face 

There are four main hurdles that collections teams face daily.

  1. Reluctance to update/replace legacy systems

Many collections leaders are reluctant to implement cloud-first collections management software. They consider on-premise applications safer and easier to use and in some cases, they just prefer sticking to the debt recovery tools they have typically used. Oftentimes, collections leaders overestimate the time, hassle, and costs involved when implementing new solutions. Unfortunately, they also underestimate the impact that digital transformation will have on simplifying and streamlining the dunning processes.

  1. Over-reliance on manual processes

From our experience, many collections teams operate using a range of different systems and tools. This means they often struggle to find correct and consistent evidence of historical communication that they have had with delinquent customers. Thus, agents waste valuable time searching for the relevant data, flicking back and forth from one tool to the next. They lack an all-in-one portal where they can access detailed information on each past-due customer and see a complete interaction history. This makes it incredibly difficult and time-consuming to create data-driven dunning strategies. 

  1. Highly dependent on the IT department 

Legacy debt recovery systems usually require advanced coding knowledge to make even the smallest of changes to the dunning templates, which prevents collections teams from editing, creating, and fine-tuning their dunning messages on an ongoing basis. In other words, agents must therefore enlist the help of their colleagues in the IT department when looking to modify the content, thus decreasing efficiency and slowing down the dunning processes.

  1. Lack of insights into their customers’ behaviour 

The only way collections teams can become more effective is by analysing which strategies work best, at which times, and for which segments. Unfortunately, too many teams cannot track how their past-due customers are behaving as their legacy systems are a black box. Agents don’t know whether past-due customers have opened their messages, visited the repayment landing page, or tried to pay but were unsuccessful. They have no way of knowing which strategies are working (and worth pursuing) and which aren’t.

How implementing collections software helps

Collections software helps debt collection teams reduce unnecessary manual effort and increase their performance. Here’s how. 

  1. Digital technology optimises collections operations

Cloud-native debt collection software seamlessly integrates with existing collections systems. It’s easy for agents to use, allows employees to work from home, and provides key performance data. Agents can quickly identify the best strategies to use before creating fresh dunning messages from scratch. 

  1. Automation increases efficiency

Automation-based debt management systems make collections teams more efficient and more effective. Agents can leverage automation to contact thousands of customers with the click of a button. They can use digital channels, such as email, SMS, or social media messages, instead of relying on direct mail or having to telephone past-due customers. This reduces postage costs and manual effort, while also increasing the likelihood that past-due customers will engage in the dunning process. Therefore, agents can focus their time and energy on dealing with high-value, high-risk customers. 

  1. Reduced spending on IT

When collections teams have to rely on their IT staff to help them create and edit dunning messages, it’s overly inefficient and incredibly expensive. Imagine your company employs 10 IT employees and pays them €45,000 per year. If they spend half of their time assisting the collections team, that equals €225,000. What’s more, you might also need an additional maintenance fee for on-premise software of around €50,0000. This comes out to a total of €275,000. In fact, this figure would be even higher in larger organisations that employ more than 10 IT staff. 

By implementing a no-code collections management software, organisations can save huge costs and create custom collections templates by leveraging an easy-to-use drag-and-drop content builder. 

  1. Leverage reporting capabilities (and boost performance)

Traditional legacy systems lack in-depth reporting capabilities, meaning collections professionals have no way to understand which strategies work best, for which segments, and at which times. Advanced collections management software provides complete transparency into how customers behave and the messaging strategies that drive action.  

Agents can use this data to identify the best dunning strategies going forward, which will increase the team’s repayment rates and shorten time-to-value. They can create up-to-date performance reports based on the latest customer data and easily demonstrate the department’s return on investment (ROI). 

It’s time to adopt a 21st-century approach to debt collections

Many debt collection teams have lagged behind the curve when using digital technology. They resist changes even though the legacy systems are inefficient and ineffective. 

By embracing modern collections management software, collections teams can increase their performance while becoming more productive. They will adopt data-driven strategies, meet consumers on their preferred communication channels, and agents can spend their time dealing with high-risk accounts.

Read our product paper to find out more about the benefits of all-in-one collections and recovery platforms.