Steps to Better Bank Collection and Asset Recovery
Some financial institutions put themselves at risk and limit their capabilities by just using agents, automated calling technology and emails to remind customers of past-due credit and accounts. Using advanced bank collections and recovery software leads to increased understanding of the overall process and gathered percentage and assures banks and credit unions stay in compliance.
Financial institutions can restructure their internal recovery process by measuring the incremental impact of actions and optimizing these activities based on characteristics of customers.
The right communications and actions for customers in the early delinquency stage are quite different from those required when litigation is involved. Delinquent credit repayment activity calls for progressive pressure exerted on the delinquent customer at the right time.
The aim is to minimize the number of cases moving through to the later stages, where the focus shifts from protecting the customer relationship to protecting assets and minimizing losses.
CARM-Pro robust bank loan collection and recovery software helps banks and credit unions increase revenues and reduce costs through improvements in compliance, resource efficiency, and superior reporting.
Another process also aims to obtain a repayment agreement to the overdue amount, followed by fulfillment of this agreement. Repayment agreements take several forms, depending on the delinquency stage reached.
Goals should function as drivers for the enhancement of accounts receivable management. In addition they need monitoring and measuring against established metrics. Activity segmentation phases include pre-litigation, litigation, and recovery. Some suggested categories in establishing goals: Days Sales Outstanding, Percent Current, Collection Effectiveness Index, Aging Bucket Performance and Bad Debt Write-off percentage.
For example, in the soft phase, agreement takes the form of a single promise to pay or a repayment plan with no change to the credit contract. For the pre-litigation phase, a repayment plan sometimes stipulates the overdue amount repaid by fractions or with a restructuring of the credit contract.
Deploying best of breed automation software organizes flows improves debtor records gathering.
Previous to the advent of automated software, many operations assigned accounts ‘from the cradle to the grave’. Representatives owned accounts from the time they fell into collections until charge off. This approach offers some important advantages such as applying increasingly firmer pressure in a consistent order as accounts age, and as collectors become familiar with specific customers and accounts.
On the other hand, this approach has disadvantages with accounts often segmented and the number of accounts assigned each collector varying widely. This makes it difficult to measure and compare performance.
The alternative approach, using a pool of resources to which accounts are dynamically distributed by robust software, offers some obvious payback. Collectors do not choose which customers to work on, planned or unplanned absences are simply dealt with, and collectors become specialized in a particular sector and become proficient at identifying solutions to bring an account current.
Our Online Self-Guided User Training Modules provides interactive training, to ensure consistent and compliant representation approaches, at no additional cost to support IBS clients, allowing platform users to take the online classes based on their availability.