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...
Delinquent accounts and collections are an inevitable part of the lending business. Delinquencies can cause cash flow and many other problems for an institution, and the process of recovering those funds can be time-consuming, expensive, and inefficient if you don't have the right tools in place.
Utilizing outsourced collection services can be a more efficient, cost-effective option if your institution is striving to reduce delinquencies and the time employees dedicate to the collections process.
Here are the top 5 benefits of outsourcing your collection efforts:
1. Reduced Collections Costs
Recovering funds that are past due is a detailed process. It may require hiring and training full-time collections staff or utilizing employees from different departments to work in a collections role. Outsourcing your institution’s collections to a third-party vendor, like SWBC, can save you the HR-related expense of hiring and training additional staff and also reduce other costs associated with the debt collection process.
More importantly, outsourcing to a third-party like SWBC allows you to take advantage of our scalability. This is the biggest reason we can save you money. We can deploy our resources to accommodate the ebbs and flows of the delinquent queue without being under or over-staffed at any one time. In addition, we integrate a high percentage of part-time resources within our staffing model, further reducing the cost.
We also have robust telephony and dialer technology that we use to facilitate timely collections, which means you get to reap all of the benefits of this technology without the expense of purchasing and implementing it within your own organization.
2. Reduced Delinquency Rates
Utilizing a third-party that employs professionals who specialize in collecting can lead to decreased delinquency rates because you are basically gaining a full-time staff of employees dedicated to recovering past-due funds on your behalf, during and outside of your typical working hours. A reputable collection service provider's employees will more than likely know all of the best practices for collecting funds and have the experience and patience to handle certain situations that may arise in a professional, courteous manner. And, they will know the tactics for getting delinquent accounts up-to-date before they progress into the latter stages of delinquency.
3. Reduced Collection Time
Rather than having a few members of your staff focus only a portion of their time collecting on delinquent accounts, allowing some to fall through the cracks and become extremely past due, outsourcing gives you an external staff of employees that can dedicate 100% of their time to these efforts and get accounts cured as quickly as possible. This increased focus and time creates a shorter collections cycle, reducing the amount of time spent collecting on a delinquent account.
At SWBC, our collections staff is dedicated to collecting and is not distracted with other work that is typically done in your collection department, like asset recovery, skip-tracing, and other administrative work associated with the collection function. However, we do offer a solution that gives you the capability to assign this type of work out to our network of asset recovery and remarketing professionals.
4. Increased Collection Rates
Another benefit of an outsourced staff fully dedicated to collecting on your institution’s behalf is an increase in the collection success rate. An increased collection rate improves your balance sheet and your bottom line.
At SWBC, we have a high utilization rate. This means, the time our collectors are at their desks waiting for our dialer to present a call to them is very short. Our dialer typically sends our staff more than 100 calls per hour. In the more manual environment that most financial institutions are operating in, you would be lucky to get 40 or 50 per hour. More calls per hour, more opportunities to talk to borrowers, and more opportunities to cure the loan.
In addition, our right-party connect rate is higher than most providers in terms of the number of borrowers we are speaking with. This is due to our dialer's efficiency and because we call people when they are home—during the evening and on weekends.
5. Increased Productivity and Revenue
Time spent working in a collections capacity, is time not spent selling or generating new revenue. When your institution outsources collections, it allows your staff to perform other tasks that improve service and borrower satisfaction. Plus, you can dedicate more time, resources, and effort to reaching strategic goals such as providing a better customer service experience, extending your brand, improving availability to market, processing and closing loans, and generating new revenue opportunities through cross-selling or adding new products.
While it can be frightening to outsource such an important part of your business, the benefits of outsourced collections often outweigh the negatives.
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