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4 Key Questions to Ask when Evaluating your Current Collections System

By Chan Hsuan
jueves, julio 1 2021

#Fintech

startup

Companies must regularly examine their ways of working and the software that they use. Innovative technology is constantly being rolled out, making life quicker, easier, and more efficient. But unless you evaluate your software regularly, you might not even know that you are falling behind the curve.

Relying on the wrong type of software (or simply opting to work with manual processes) can have drastic impacts:

  • Citibank lost $500M because of bad interface design—three employees accidentally sent one of their creditors the wrong amount of money.
  • Poor software quality costs US-based business alone a reported $2TN in 2020.
  • Recent research suggests that human errors caused by manual processes are companies’ biggest data reconciliation pain points. This number is rising now more ever with the increase of staff working from home.

Fortunately, these hurdles are far from insurmountable. In this article, we outline why it is so important to evaluate your current collections management software before laying out 4 key questions that you need to ask yourself during this process.

Why is it so important to evaluate your current collections management software?

People are naturally resistant to change. After all, it is far easier to stick with the same processes and tools instead of having to relearn everything from scratch. But this approach could be actively hurting your collections success.

You need to regularly examine your collections management software to make sure it is still up-to-date. For instance, if your software was built in the early 2000s, you probably cannot connect it to social media channels—they did not even exist back then. However, if you are leveraging a multichannel communications strategy, your collections management software must be able to integrate with all channels.

Or perhaps your software is technically sound but is not giving you the complete functionality that you need. Although you can connect it to your various channels and examine your raw performance data, you have to then export this data into your business intelligence (BI) tool to visualise it. Given that the best modern collections management software has inbuilt reporting functionality, you are obviously missing a trick by not upgrading/replacing your current system.

You should also adopt an external-facing lens when evaluating your software. This means one thing: is it helping you connect with your customers? Is your software shedding light on customers’ behaviour, their preferences, and their complete financial history. Or does it keep you in the dark, leaving you unable to manage each individual past-due customer? In a digital-first world, where personalisation, AI-based optimisation, and real-time analysis are part and parcel of life, you need software that has all these features in abundance.

That said, nothing is more important than security. Data breaches can put your customers in harm’s way while also ruining your company’s reputation. As hackers become more and more advanced, it is crucial that you rigorously evaluate your software providers to ensure their solution is safe enough and that it can combat all external threats.

4 key questions to ask yourself when evaluating your current collections system

If you are unsure of where to start, begin by asking these 4 crucial questions.

1. Is it cloud-native?

The cloud is a key weapon in modern organisations’ armouries. Cloud-native applications allow your key data to be accessed from anywhere, at any time, providing the user has the correct login credentials. With the increase of employees looking to work from home, this is a trend that will continuously need to be reviewed.

Just as importantly, cloud-native applications are more cost-effective than their on-premise alternatives. You do not have to pay for servers or worry about ongoing system management. The maintenance of the system is all handled on your company’s behalf, with the software automatically being updated as soon as new developments are ready to be rolled out.

The best cloud-native collections management software also easily integrates with your existing tools, meaning you can simply plug and play without having to go through lengthy set-up processes.

2. Is it employee & user-friendly?

There are two separate areas that you need to examine: your employee experience (EX) and user experience (UX). Collections management software must provide both a killer EX and UX.

If your employees struggle to use the existing software, they might make mistakes (similar to the Citibank incident). They will be less productive, and they will enjoy their job less which could lead to higher employee churn.

If customers struggle to use the software, you will fall flat on your face and miss your primary goal: recouping money that you are rightfully owed. With more and more modern, digital-first consumers in post-COVID times, you need to provide self-service functionality, communicate with them on a wide variety of channels, personalise each individual customer’s experience, and treat the repayment process as a dialogue—rather than the imposition of terms.

Fortunately, modern collections management software features intuitive tools (such as no-code landing page builders and multi-armed bandit optimisation) to make your employees’ lives easier. Likewise, by offering customers the chance to self-serve using digital payment methods, or to schedule instalment plans themselves, or to simply be communicated with using their preferred channels, you improve their customer experience (CX)—which will lead to higher repayment rates.

3. Does it provide a branded experience?

It is more important than ever before to provide a seamless end-to-end brand experience—especially when consumers are dealing with their personal finances. If they are paying your company back but the payment portal they click on features another company’s branding, they will likely feel uncomfortable handing over their credit card details.

The best collections management software provides a white-label service. In other words, you can simply layer your own branding on top of the raw platform. Customers will then feel safe in the knowledge that their money is going where they intend and their personal data is not handled by the third party. By providing a seamless, interconnected, and fully branded customer experience, you will also increase your customer retention rate.

4. Does it provide you with key KPIs?

There is a range of key KPIs that can shed light on your collections performance—and on your customers’ behaviour. Of course, you probably already know about the big ones: days sales outstanding (DSO), recovery rate, outbound calls, etc.

But while these undoubtedly shine a light on your performance to date, they do not exactly help you identify where—or how—to optimise your approach. That is why you need to work with collections management software that also provides you with key digital campaign KPIs.

By analysing your messages’ open-rate, you can pinpoint which strategies and templates work best for which segments, and increase the likelihood that your messages have the desired impact. By examining whether landing page A’s design performs better than landing page B does, you can optimise your repayment pages and bolster the percentage of visitors that repay in full.

Pick a collections management software that gives you easy access to these crucial KPIs. Better still, opt for a provider that visualises this raw data, helping you quickly understand the story that it is telling.

Make sure you are working with the best tools

Transforming your current ways of working and adopting new cloud-native software might seem like a daunting task. However, by not evaluating—and updating—the software that you use, you run the risk of forever falling behind your competitors.

Make sure you work with consistently up-to-date software that makes both your employees’ and users’ lives easier. Leverage cloud-native applications to reduce running costs and benefit from easy integrations. Implement systems that provide you with must-know metrics at your fingertips, helping you continually optimise your performance.

If you do, you will increase your collections’ success moving forward.

Thinking of switching to another collections software provider? If so, check out post: The Ultimate Checklist for Evaluating Enterprise Software Onboarding.