Technology and Collections

Technology has played a pivotal role in collections over the last decade. Not only have staggering improvements in process efficiencies been achieved but a completely new set of collections concepts have been developed to make optimal use of these new toolsets.

This series of tips will review the various technology options that collections managers have at their disposal. This third tip discusses some of the operational factors that need to be considered when selecting a collections system.

Tools to enhance collections operations
Operational factors need to be carefully considered if an organisation wants to improve the efficiency and effectiveness of its collections. Companies with excellent collections strategies will certainly be hindered by the poor operational execution of these strategies. This can be due to poorly thought out processes, management techniques, performance measurement and inappropriate systems. However, if it is done correctly using well designed processes and systems then collections strategy effectiveness can be maximized and costs of the area minimized.

The following are key operational issues to consider when selecting a prospective collections system.

Work allocation
A collections strategy defines which accounts should be allocated to which actions – including manual actions such as telephone calls required from collectors. A good collections system will be designed to allow for ease of allocation of these accounts to the collectors. It should be possible to have a variety of allocation options available – depending on the company’s business structure. This would include the ability to allocate accounts to individuals or teams, to allocate on a random basis or based on a portfolio and to allow for automated reallocation should an individual be sick or on leave.

Communication automation
Considerable gains in efficiency lie in communication automation. This refers to the ability of a collections system to automatically generate letters, SMS (short message service) messages, telegrams and dialler files for telephone calls. Communications technologies continue to develop and it is important that the system can deal with new communication channels such as email and the host of new cellular telephone communication means that keep emerging.

Performance management
The ability of operational managers in a collections environment to adequately manage the performance of their team is directly related to the performance measurement information that they have at their disposal. A common excuse from collections systems vendors is that the collections data is kept in an open database and all data can be extracted and analysed as desired. This data is often only available retrospectively (sometimes it is required online), and the database structures and internal data collection parameters inherent to the system are generally far too complicated. This would therefore inhibit adequate analysis and generation of reports. It is also critical that adequate reports are delivered when the collections system is implemented.

This tip looked at some of the considerations a collections manager should take into account at when selecting an appropriate system to deal with the operational aspects of collections. The next tip in the series will provide more information on what to examine when looking at the operational side of collections and collections systems.

Paul Shortridge is a Senior Consultant at PIC Solutions, the largest customer management solutions company based in the Southern Hemisphere. He has over 5 years experience in the financial services industry. Previously with Nedcor as manager – innovation in retail credit, he headed up a team that successfully rolled out projects to reduce risk, increase revenue and reduce costs across all credit and transactional products. In this role, he implemented initiatives that increased revenue by R100 million and introduced their 8-second home loan pre-approval process. As lead consultant at London Bridge Group, Paul was responsible for the business lead in large scale project implementations as well as assisting the sales team with expanding their market in South Africa. He holds a BSc and MSc in Chemical Engineering from the University of Cape Town.