Automated debt collection software allows banks and credit unions to process increased collection volume with current or fewer collections staff.
Some analysts predict that consumers’ bills and debt will vastly increase due to inflation. The amount of payment default on debtors’ business and consumer loan accounts is also expected to rise sharply.
This economic state of rising money pressures on debtors, in addition to financial institution collector shortages as collection compliance demands rise, calls for the benefits of automated debt collection management systems.
Information in this guide will help debt collectors at banks and credit unions to understand the experience and benefits of using contemporary software such as CARM-Pro™ Collections and Recovery Manager – Professional by Intelligent Banking Solutions™. It also raises questions for bankers to consider regarding service automation tools that can enhance relationships with their customers and employees.
Accounts Receivable Automation for Banks and Financial Institutions
Accounts receivable automation ensures action on a great number of repetitive collection tasks.
For example, CARM-Pro™ software can be configured to send borrowers predictable and consistent messages such as due date reminders or past due notices according to bank policies or compliance rules.
This access to tools that process repetitive tasks is a key way that bank and credit unions can increase collector effectiveness and job satisfaction. For example, when people aren’t burdened with simple repetitive tasks, they gain time to focus their interest on solving problems and improving customer services.
Configurable accounts receivable automation software enhances bank productivity and performance. This creates a positive experience for anyone involved in the process. The accounts servicing software in all core banking systems is compatible with CARM-Pro™ technology.
Automated vs. Manual Collection Processes
Automated collection tools can help streamline the way a great number of actions in the debt collection process are done. When formerly manual collection actions are automated, people who perform debt recovery can expand their work load capacity as they accomplish more in less time.
CARM-Pro™ can also enhance the ability of financial institutions to customize messaging based on their culture and philosophy. For example, CARM-Pro™ can be configured with creditor brand messaging elements across all forms of communication with debtors, from bank or credit union letterhead to text, email and voicemail messages.
Five key benefits of an automated versus manual collections process include:
Efficient Tracking and Recovery of Loan Debt
Automated Software Streamlines Contact with Outside Vendors
To service outstanding loans throughout the loan debt recovery stage of each account, bank debt collectors must routinely coordinate with dozens of outside vendors. This includes any company that provides services a debt collector needs in order to:
- Gain physical possession of a loan collateral asset (property, vehicle, etc.)
- Prepare the asset to list for sale
- Advertise and sell the asset
These types of companies or agency professionals typically include: attorneys, auctioneers, auto reconditioners, business information and analytics firms such as LexisNexis, door knockers, locksmiths, repossession agents, construction and specialty contractors, building inspectors, advertising agency specialists, and more.
Loan recovery professionals can save valuable hours of cumulative time every week by using automated collection technology such as CARM-Pro™ instead of cumbersome and time-consuming manual steps to coordinate with vendors.
For example, one mouse-click in CARM-Pro™ automated debt collection software can:
- Research debtors’ contactability, collectability, and recovery score
- Request that a door knocker vendor confirm if a mortgaged property is still inhabited
- Notify a repossession company of the debtor address and vehicle make, model & VIN
- Automatically provide all vendors with comprehensive information vs. manual forms
- Proactively populate name and information into request forms that vendors need
Automation Reduces Bank Resources and Employee Time
Financial institutions can reduce the amount of time their debt collectors devote to managing borrowers’ accounts – and the number of service people in their collection departments – with automated debt collection technology such as CARM-Pro™ Collection and Asset Recovery Manager – Professional by Intelligent Banking Solutions™.
Automation Improves Collection Effectiveness
Four key ways that CARM-Pro™ automation improves debt collection effectiveness are:
Leverages All Debtor Communication Channels
- Collectors can leverage all types of debtor access allowed by law to consistently communicate about loans. Access channels include U.S. Mail, email, SMS text messages, and calls to land lines or mobile phones. Debtors can choose the contact method, timing, and location (home or work) that they prefer, which can help reinforce the debtor – creditor relationship.
Deploys Analytics to Sequence and Prioritize Work Flows
- Automated technology like CARM-Pro™ can deploy analytics information from internal bank calculations or outside entities regarding debtors’ payment patterns. This enables financial institutions to sequence, prioritize and assign collector work flows to maximize collection effectiveness and efficiency. Automation executes banking collection policies and procedures based on decisioning capabilities outlined by each institution. It ensures that each collection action is consistently performed and documented according to this unique selection criteria.
Provides Access to Comprehensive Debtor Account Information
- CARM-Pro™ maintains comprehensive details about all types of debtor accounts (loan or deposit) at every financial institution, as well as credit card debt with other banks. This information provides creditors with a full picture of debtors’ outstanding debt, as well as credit score details, collection scores, and other data that can help determine what and when their next-steps should be to support efficient, compliant collections.
Maintains Powerful Data that Empowers Proactive Action
- CARM-Pro™ tracks data that enables debt collectors to analyze and predict customers’ debt payment behavior patterns. Leveraging this data saves time and money for banks and credit unions, as it enables proactive action and avoids costs associated with defensive reaction.
Automated Collections Software Reduces Human Error
Automated collections software reduces the risk of human error because it automatically performs and documents collection actions exactly as configured. Technology such as CARM-Pro™ Collection and Asset Recovery Manager – Professional by Intelligent Banking Solutions™ can process and document several steps traditionally performed manually by humans. Automation can reduce the risk of human error, ensure compliance with federal and state regulations, and increase people’s time to perform proactive work that supports relationships with debtors and upholds bank policies.
Loan Recovery Policy Execution Increases with Automation
Each financial institution’s adaptation of powerful CARM-Pro™ technology is influenced by its own culture, internal policies and procedures, and overall organizational goals. CARM-Pro™ is flexible and scalable automation that can be configured to achieve whatever goals a banker sets.
Examples of how automation can enhance the consistent execution of collectors’ loan policies:
- Credit unions and community banks that value a service centric collections process and long-term debtor relationships more than stringent financial metrics and faster debt recovery can configure CARM-Pro™ to achieve their goals.
- Super regional banks that seek high performance and faster return on each collection action can configure CARM-Pro™ work flows more aggressively to achieve their goals.
Software Prevents Collections Compliance Oversights
Robust collections technology such as CARM-Pro™ can automate collector work flows to ensure consistent compliance with all internal bank policies and government regulations, such as the Fair Debt Collection Practices Act and the Consumer Financial Protection Bureau. Several external entities have investor/guarantor or insurance positions on loans. For example, mortgage loans with Freddie Mac or Fannie Mae; loans with state housing authorities, FmHA, and VA; and student loans with Sallie Mae each require specific steps such as 15-, 30-, or 45-day alert letters.
Loan Debt Collections and Payment Procurement from Borrowers
Payment procurement from borrowers is a key part of loan debt collections in today’s economy. More and more, financial institutions are seeking ways to lower costs and increase productivity with fewer employees as debt volume rises. Wise financial institutions rely on automated debt collection software such as CARM-Pro™ Collection and Asset Recovery Manager – Professional by Intelligent Banking Solutions™ to help them achieve their goals for customer service; staff productivity and satisfaction; and scalable, efficient, compliant loan debt tracking and recovery.