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. The first tip of the series will focus on some aspect of collections strategy and the various factors that need to be considered when selecting and implementing a collections system.

Tools to Enhance Collections Strategy
Collections strategy is the set of high level decisions made by a collections area. Typically these include the following:

Collections policy rules – for example, accounts with a “holder deceased” status need to be dealt with in a particular way by a particular group of people.
Tilting – this refers to setting appropriate actions to accounts – for example, in early stage collections, accounts with high risk will be accelerated and a harsher tone and a more confrontational type of collections action will be used.

A good collections strategy will take a base of delinquent accounts, segment them using a set of sound collections principles and then allocate an appropriate set of actions to each account.

A number of technologies can enable or assist in this: collections systems, account management systems and even certain diallers. Since this is such an important part of the collections process, it is critical that before a collections manager purchases any system that they ask the following questions:

Can the system segment accounts according to best practice collections principles?
These principles vary according to the collections environment being considered, for example, behavioural scoring is an important segmentor in early stage collections, but useless in late stage collections.

Can the system set appropriate actions to accounts depending on their segmentation status?
This would include the ability to accelerate or delay actions, the ability to determine different types of collections contacts – like SMS, telephone calls or letters – and the ability to vary the severity or tone of the collections action.

This tip looked at some of the considerations a collections manager should look at when selecting an appropriate system to deal with the strategy side of collections. The next tip in the series will discuss some more items to look at when considering the technology options around collections strategy.

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.