Debt collection and recovery guidelines, alongside debt collection software for banks, help banks and credit unions remain in compliance and control risk. Clear debt collection strategies also ensure trustworthy and efficient administration that helps debt collectors realize those objectives.
Solid business principles of bank collections are valuable to banks and credit unions in many ways. Payments pursued with robust principals of bank collections enable collectors to obtain owed funds, maintain systematic follow-up, engage customers, and preserve goodwill.
For money collection, the primary responsibility of a bank debt collections department is to gather the money as close to the terms of the obligation as possible. The debtor has an obligation to pay within the terms of the agreement. The tone may be tolerant at first, but should be intensified and accelerated as much as necessary to ensure payment by a debtor.
Accurate information analysis and a well-defined policy can help financial institutions to address issues within the company’s objectives. It can also allow for flexible consideration of the economic climate in general, the importance of the customer, and the effect of the combination of dollars and number of customers delinquent on the entire portfolio of receivables.
Debts and the debt collections process can be efficiently managed with CARM-Pro™ – Collection and Recovery Manager – Professional by Intelligent Banking Solutions. CARM-Pro™ is vigorous bank loan collection and recovery software that helps banks and credit unions increase revenues and reduce costs with improved compliance, resource efficiency, and superior reporting.
Systematic Follow-Up and Discussion
Following the initial engagement with a delinquent borrower, it is important to maintain a firm schedule of subsequent communications. Information about payments should be noted in each borrower’s file.
For all debts owed, methodical follow-up on accounts, even those which cannot pay right away, reinforces the serious status of outstanding debt. It also emphasizes the importance attached to it by the creditor. That in itself is an important advantage.
Consider the pattern of payment, whether there have been partial payments or any effort to settle the debt. Has the customer made any sincere effort attempt to take care of the obligation? If the customer is new, you owe it to them and your company to make your policy clear from the start. Neglecting delinquency at this time is inviting problems forever with the account. If it is an old customer, how has the payment pattern been? What about previous delinquencies? Is there a problem with the product or service?
The object of the discussion remains obtaining the debtor’s explanation for the delinquency. Is it due to a dispute; temporary shortage of funds; or the customer intention to hold off payment so the creditor’s money goes elsewhere?
The same investigative and analytical tactics used for credit approval are applicable for the process.
CARM-Pro could root out problems before they occur. It keeps the necessary information current, compliant and organized with robust software.
A customer experiencing difficulty in meeting payments can still become a good customer in the future. Consequently, it is important to show empathy and preserve goodwill while pursuing repayment of debt. This requires discretion, plus familiarity of the customer and industry.
Previous dealings with the customer can help. How has the customer lived up to its commitments in the past? Has the account ever been closed and reopened?
Good business requires the prompt settlement of invoices without any damage resulting to the customer relationship.
One of the advantages of a specialized bank collection system is maintaining vital information that can help credit and customer service personnel to better understand the relationship of the customer and overall marketing objectives of the financial institution.
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