Tag: collections scoring

As economic conditions shift and consumer behavior fluctuates, first- and third-party debt collectors must adapt to continually maintain effective debt collection strategies. In this article, we explore collections best practices that can empower collectors to improve operational efficiency, better prioritize accounts and enhance customer interactions, all while ensuring compliance with changing regulations. Best practices for improving your collection efforts 1. Implement a data-driven collection strategy Many collectors are already using artificial intelligence (AI) and machine learning (ML) to gain a more complete view of their consumers, segment accounts and create data-driven prioritization strategies. The data-backed approach is clearly a trend that's going to stick. But access to better (i.e., more robust and hygienic) data and debt collection analytics will distinguish the top performers.You can use traditional credit data, alternative credit data, third-party data and advanced analytics to more precisely segment consumers based on their behavior and financial situation — and to determine their propensity to pay. Supplementary data sources can also help with verifying consumers' current contact information and improving your right-party contact rates.Cloud-based platforms and access to various data sources give debt collectors real-time insights. Quickly identifying consumers who may be stretched thin or trending in the wrong direction allows you to proactively reach out with an appropriate pre-collection plan.And for consumers who are already delinquent, the more precise segmentation and tracking can help you determine the best contact channels, times and personalized treatments. For instance, you could optimize outreach based on specific account details (rather than general time-based metrics) and offer payment plans that the customer can likely afford. 2. Use technology to maximize your resources Data-driven prioritization strategies can help you determine who to contact, how to contact them and the treatment options you offer. But you may need to invest in technology to efficiently execute these findings. Although budgets may be limited, the investment in debt recovery tools can be important for handling rising account volumes without increasing headcount. Some opportunities include: Automate processes and outreach: Look for opportunities to automate tasks, particularly monotonous tasks, to reduce errors and free up your agents' time to focus on more valuable work. You could also use automated messages, texts, chatbots and virtual negotiators with consumers who will likely respond well to these types of outreaches. Establish self-service platforms: Create self-service platforms that give consumers the ability to choose how and when to make a payment. This can be especially effective when you can accurately segment consumers based on the likelihood that they'll self-cure and then automate your outreach to that segment. Keep consumer data up to date: Have systems in place that will automatically verify and update consumers' contact information, preferences and previous collection attempts. Reprioritize old accounts based on significant changes: Tools like Experian's Collection Triggers℠ allow you to monitor accounts and automatically get alerted when consumers experience a significant change, such as a new job, that could prompt you to put their account back into your queue. 3. Prioritize customer experience In some ways, debt collectors today often work like marketers by embracing digital debt collection and a customer-first philosophy to improve the consumers' experiences. Your investment in technology goes together with this approach. You'll be able to better predict and track consumers' preferences and offer self-cure options for people who don't want to speak directly with an agent. You also may need to review your regular onboarding and training programs. Teaching your call center agents to use empathy-based communication techniques and work as a partner with consumers to find a viable payment plan can take time. But the approach can help you build trust and improve customer lifetime value. 4. Continue to carefully monitor regulatory requirements Keeping up with regulatory requirements is a perennial necessity for collectors, and you'll need to consider how to stay compliant while adding new communications channels and storing consumer data. For example, make sure there are “clear and conspicuous" opt-out notices in your electronic communications and that your systems can track which channels consumers opt out of and their electronic addresses.1In some cases, the customer-first approach may help minimize regulatory risks, as you'll be training agents to listen to consumers and act in their interest. Similarly, data-driven optimizations can help you increase collections with fewer contacts.WATCH: Explore credit union collection trends and successful account management strategies. Partner with a top provider to achieve success Experian has partnered with many debt collectors to help them overcome challenges and increase recovery rates. There are multiple solutions available that you can use to improve your workflow: TrueTrace™ and TrueTrace Live™: Leverage access to the consumer credit database that has information on over 245 million consumers, and additional alternative databases, to maintain current addresses and phone numbers. PriorityScore for Collections ℠ Know which accounts you should focus on with over 60 industry-specific debt recovery scores. You can choose to prioritize based on likelihood to pay or expected recovery amount. Collection Triggers℠: Daily customer monitoring can tell you when it's time to approach a consumer based on life events, such as new employment or recent credit inquiries. Phone Number ID™ with Contact Monitor™: Increase right-party contact rates and avoid Telephone Consumer Protection Act (TCPA) violations with real-time phone ownership and type monitoring from over 5,000 local exchange carriers. Experian's PowerCurve® Collections and Experian® Optimize solutions also make AI-driven automated systems accessible to debt collectors that previously couldn't afford such advanced capabilities. Building on Experian's access to many sources of credit and non-credit data, these solutions can help you design debt collection strategies, predict consumer behavior and automate decisioning.Learn more about Experian's debt collection solutions. Learn more This article includes content created by an AI language model and is intended to provide general information.

Every portfolio has a set of delinquent customers who do not make their payments on time. Truth. Every lender wants to collect on those payments. Truth. But will you really ever be able to recover all of those delinquent funds? Sadly, no. Still, financial institutions often treat all delinquent customers equally, working the account the same and assuming eventually they’ll get their funds. The sentiment to recover is good, but a lot of collection resources are wasted on customers who are difficult or impossible to recover. The good news? There is a better way. Predictive analytics can help optimize the allocation of collection resources by identifying the most effective accounts to prioritize to your best collectors, do not contact and proceed to legal actions to significantly increase the recovery of dollars, and at the same time reduce collection costs. I had the opportunity to recently present at the annual Debt Buyer Association’s International Conference and chat with my peers about this very topic. We asked the room, “How many of you are using scoring to determine how to work your collection accounts?” The response was 50/50, revealing many of these well-intentioned collectors are working themselves too hard, and likely not getting the desired returns. Before you dive into your collections work, you need to respond to two questions: Which accounts am I going to work first? How am I going to work those accounts? This is where scoring enters the scene. A scoring model is a statistical algorithm that assigns a numerical expression based on known information to predict an unknown future outcome. You can then use segmentation to group individuals with others that show the same behavior characteristics and rank order groups for collection strategies. In short, you allow the score to dictate the collection efforts and slope your expenses based on the propensity and expected amount of the consumer to pay. This will inform you on: What type, if any, skip trace tactic you should use? If you should purchase additional data? What intensity you should work the account? With scoring, you will see different performances on different debts. If you have 100 accounts you are collecting on, you’ll then want to find the accounts where you will have the greatest likelihood to collect, and collect the most dollars. I like to say, “You can’t get blood from a stone.” Well the same holds true for certain accounts in your collections pile. Try all you like, but you’ll never recoup those dollars, or the dollars you do recoup will be minimal. With a scoring strategy, you can establish your “hit list” and find the most attractive accounts to collect on, and also match your most profitable accounts with your best collectors. My message to anyone managing a collections portfolio can be summed up in three key messages. You need to use scoring in your business to optimize resources and increase profits. The better data that goes into your model will net you better performance results. Get a compliance infrastructure in place so you can ensure you are collecting the right way and stay out of trouble. The beauty of scores is they tell you what to do. It will help you best match resources to the most profitable accounts, and work smarter, not harder. That’s the power of scoring.