The financial services industry is continuously evolving, and it is essential to optimize collections strategies to maintain liquidity and minimize risk. One of the most critical choices for credit un...
Collections
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2 min read
The process for collecting past-due loan accounts is extremely challenging for many financial institutions. It can be tedious because most institutions use a manual rather than an automated process, leading to low productivity. However, transitioning your in-house collections to a seamless and efficient process is not as difficult as you may think.In fact, you could easily transform your collections operations in 60 days or less.
I bet you're wondering, "How on Earth is that possible?" Keep reading to find out how!
Step 1: Audit Your Current Process
Get a “big-picture” understanding of how your collections agents are currently operating and how conducive the process is to success and productivity.
Conducting a thorough synopsis of your collections "state of the union" will help you to understand how things are being completed. From this audit, you'll be able to find holes in the process and see exactly where things can be improved. It could be that manual processes are dragging you down, or it could be the level of talent you've hired isn't the best fit for the work being done. Either way, you won't know the root of the issue until you audit your current collections process.
Click here to learn the top 8 characteristics of successful collection agents.
Step 2: Shop Around
Research the different collection platforms available. There are several collections software options in the marketplace that will automate some of the labor-intensive tasks that your collections agents must perform, but the key is to find a system that meets your institution's specific needs. Your financial institution may not have the same book of business as your competitor down the street, and the way you collect on delinquent accounts could be completely different. When you choose to streamline collections through technology, make sure that the system can be customized to fit your needs—not the other way around.
Step 3: Integration
Once you choose a software system that you've deemed user-friendly and sufficient to meet the needs of your institution, you can start the integration process. A reputable collections software provider should be able to complete the entire integration process in 45–60 days. This process will typically include:
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Integration with your core processing system
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Secure transmission of your loan account information
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Setup of borrower-facing online payment portal
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Thorough user training
Delinquencies are an inevitable part of the lending business, but whether your collections process is streamlined or fragmented is ultimately your decision. It is important to evaluate your portfolio, conduct thorough due-diligence on any partner(s) you are considering working with, and find the option that is the right fit for your financial institution and your borrowers.
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