Time to optimize debt collection practices for best financial performances
Sep 25, 2013 Philip Burgess
As the economic recovery continues to improve conditions among businesses, lenders, public sector organizations and, of course, consumers, the time is right for debt collectors to get ready for massive financial improvements. With record-high volumes of outstanding loans still presiding among the private sector and consumer market, there is a ripe opportunity to capitalize.
Debt collection agencies will need to ensure that their practices adhere to the guidelines of the Fair Debt Collection Practices Act (FDCPA) to avoid fines, sanctions and lost ground in the fight to obtain higher payoffs. However, the most successful firms will be those that focus on the strengthening of brand images, boosting customer relations and lender interactions for the most preferable positioning.
It's good to be a collector
InsideARM recently asserted that the glass is half full for collection agencies, as household debt has increased substantially and consistently throughout the past several decades. However, the time to act is now, as several studies indicate that the average amount of household debt in the United States will begin to rise even more following stronger economic performances in a variety of segments.
For example, as home values begin to grow again, which has not happened since before the Great Recession and housing crisis, more individuals will become comfortable with taking out new lines of credit. According to the news provider, the increase in household debt will directly lead to a higher demand for debt collection services, and that market will likely only continue to get more competitive in the coming years.
The debt collection industry has already become highly saturated, as debt during and after the financial fallout skyrocketed. However, the past few years were marked by more calm and cautionary actions on behalf of business owners and consumers who did not want to rack up more debt before completely reconciling any outstanding loans.
The source explained that other economic indicators such as disposable income are also showing new signs of life, which will lead to even higher retail and lending performances. Before it is too late to build strong relationships with creditors and borrowers, agencies should jump in and get the ball rolling for long term financial growth.
Brand, brand, brand
Agency decision-makers should always remember that it only takes one illegal or otherwise rude call to create a stigma for their entire operation. Since debt collectors are already working against a certain level of anger among consumers, the most successful firms will be those that go above and beyond the call of duty to assist and cater to the demands of their clientele.
All employees should first be taught and tested on the guidelines of the FDCPA, as well as any state or industry-specific rules and regulations that might apply. Then, training should go to the next level, ensuring that every staff member who is making calls understands the modern best practices of customer service.
Finally, companies who do not have experience in debt collections should choose agencies that have proven their value and brand image.