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Legal Collections – Has compliance improved your collections?

May 28, 2015
Debt Collection

Continuing my series of ‘no brainer’ statements and questions, I know you are all now rolling your eyes and saying ‘duh’. But roll back a few years and not everyone had made the connection between compliance and results. I worked in a collections environment where the manager would come to the door of his office and bellow “I can’t hear you shouting!” and whilst results were ok, we now know how much better they could actually have been with an individually tailored approach instead of the sausage factory process we used. Old style collections effectively worked only on either the wheat or the chaff ….. Rarely both!

The heightened awareness and embracing of compliance and quality has changed a culture of one size fits all to one of bespoke tailoring. No more production line bludgeoning customers into submission measuring metrics looking only at outcomes and ignoring how they were achieved. Manage each stage of the cycle independently and you’ll identify and thus prevent any overstep or wrong move.

Of course compliance isn’t just about getting your business processes right and making customer outcome, customer fairness and customer awareness the foundation of your business, it’s about other factors too, health & safety, staff wellbeing & moral, planning, financial prudence and protections to mention but a few. All stakeholders must be demonstrably compliance savvy and more importantly able to evidence it post event.

But has being more compliant improved your results? Well only you can answer that, but previous collection practice took a firmer stance and the outcome was generally that half paid through fear or guilt and half refused because they resented the way they were being asked or were established won’t pay’s. Very little middle ground and a rather adversarial environment.

Nowadays we are not only mindful of individuals and their circumstances a great many of us have been, are still, or know someone in the same situation so we adapt our language and tone to suit the customers and we look to understand what is actually happening in order to gain the best result, allowing us to properly identify those actively avoiding payment and challenge those customers accordingly. A much healthier balance I’m sure you’ll agree.

Recent CSA figures show that the amount of consumer debt held by their members has remained static but there has been an increase in both the volume and value of debt in active collections, however the value rose only 4% whilst the number of debts rose 19% indicating that the average value of debt in collections is lowering, possibly suggesting customers are taking control of their debts sooner than previously, or that creditors are interceding sooner and putting on the brakes to minimise exposure for both parties?

So logic would say that we should be setting up more payment plans and doing much better in terms of penetration of our outstanding debts, although not necessarily collecting the same amounts…..more payers less cash. So in the long term of course we collect more, we just need to be a bit more patient and show forbearance whilst we wait to reach target.

Perhaps an indicator that compliant and pro-active collections are working more effectively and more cohesively with the people who matter!

This article is provided for general information only. Please do not make any decision on the basis of this article alone without taking specific advice from us. stevensdrake will only be responsible for the advice we give which is specific to you.

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