Technology in tailored collections

In an earlier blog, we highlighted the growing sophistication that is required to deliver continuous improvement in the credit and collections environment and in particular using tailored collections to support improvements. But along with this evolving thinking is a rapidly evolving set of technical solutions being used to deliver risk and collections strategies.

Here we briefly explore some of the ways that the latest technologies are being used to improve performance and efficiency and consequently reduce cost as part of a more tailored collections experience.

1. Automating credit decisioning using credit score cards - These scorecards are used to automatically categorise the risk of a given customer and determine an appropriate credit limit and review strategy. It has been used widely in high volume consumer sectors (such as financial services) for some time now but is also being adopted in many commercial trade scenarios too. It can reduce subjectivity and deliver a more consistent credit decision in a fraction of the time involved in traditional methods.
2. Automatically profiling customers and assigning them to a collection strategy. As with credit score cards, profiling systems will take multiple inputs, including credit reference data, internal data and even marketing data (in a consumer environment) to understand as much as possible about the customer to determine how they might react to different debt management approaches.
3. Debt Management workflow systems to automate the collections and dispute management process. These systems are essential for delivering the more sophisticated strategies in high volume environments, but any business with more than a few thousand customers could also reap benefits. These systems minimise prep time and maximise contact time meaning that more debt can be managed by fewer people.
4. Self-serve portals and credit card lines make it easier for customers to pay. The growing trend is to get more and more customers to engage and take ownership of their accounts. At their most sophisticated, these systems allow customers to print off invoices, make payments, dispute charges and set-up recurring payments via an app or website. Others simply allow customers to make payments online or over the phone on an automated payment line.
5. Auto- diallers have been around for many years now. These schedule calls for a collector to optimise contact time. These are now being supplemented with a number of really cool technologies such as:
   1. Whisper technology to provide the collector with in-ear advice and relevant information during a call.
   2. Interactive voice messaging (IVM) where the system can deliver a high volume of automated messages and allow the customer to choose to interact with an agent or make a payment (for example).
   3. Speech analytics, used to to provide in-call quality control ensuring that the quality and effectiveness of the call is optimised. Good for optimising results but also for ensuring compliance to standards and regulations. Speech analytics can also be programmed to detect signs of evasion or vulnerability.
6. Social media, email and text messages are starting to be more widely adopted as valuable sources of information and as methods of making contact. When an email or text message is used to deliver a reminder notice, this presents the ability to direct a customer to a payment portal to make a payment - we call this “pull payments”.
7. Auto-allocation has again been around for some time, but systems are getting smarter, meaning that the match rate is improving. Auto-allocation systems are especially useful in high volume environments where efficiency savings can be significant.
8. Dashboards and data visualisation are starting to replace the traditional slide deck used in many organisations to track and report performance. The power of dashboards is they allow users to drill down into layers of detail, exploring the key levers of any specific KPI or metric.
9. Electronic billing has evolved a long way since its early days. Now there is far greater flexibility in the method of delivery, ranging from flat data files to PDF invoices. There are also intermediaries who will receive paper and electronic invoices and convert them to a consistent electronic form for transmission and upload to a company’s system.
10. Artificial Intelligence is also now starting to appear, integrating many of the above components. This can deliver a platform that, at its most sophisticated, allows customers to self serve in the negotiation of an arrears settlement planc and the day to day management of their account. It also supports collection agents to help them determine the best course of action for a specific set of circumstances.

Many of these technologies are already deployed in high volume environments,especially within utilities, telecoms and financial services. Now, as they become cheaper and easier to implement, they are becoming more accessible for companies with smaller portfolios, for example in a business to business environment where the customer base includes large numbers of owner-managed businesses or sole traders.

When combined to deliver a well thought out set of tailored collection strategies these tools not only increase the effectiveness of collections, but can deliver significant efficiency savings; which can then be reinvested into the collections process to drive further performance gains or be released to reduce process cost.

But technology solutions are only as good as the data inputs, the quality of the implementation itself and the supporting processes. Companies must choose systems wisely but they also need to recognise that technology is only part of an end to end integrated solution, not a solution in itself. Our working capital specialists have many years of experience designing efficient and effective Order to Cash processes and integrating technology to optimise the balance between performance and operational efficiency.

Please contact Niall Cooter or Stephen Tebbett if you would like to know more. 

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