debt collection
Each credit and collection firm is different and have a different debt collection process. Unfortunately, despite their differences, after analysing more than 100,000 collection calls, Lightico has seen that many fall prey to the same pitfalls: They use dated technologies which hinder their ability to collect debts. And these dated collection processes hurt efficiency and profitability.


Nearly every debt collection agency (DCA) proudly establishes that their uniquely high collection rates are because of their particular collection methodology. It is certain that each collector, through their years of experience, has found what works best for them, their debtor base, and have identified what are the critical steps for an efficient and successful debt collection pursuit. Despite their unique approaches, they share several core tasks and challenges. This paper looks at the basic components and paints a picture of where simple technology changes can step-change collection yields and debtor/collector interactions.


Despite the proliferation of advanced communication technologies - including texting, internet and more - many collection firms have been reluctant to advance their collection practices. Rightly so, DCAs have been cautious with compliance concerns, but this enormous fear of new technology has hurt the collection collections yield. As a result, there are some obvious technological advances that can improve the industries efficacy and debtor/collector dynamics. Technology opens up the door towards propelling the debt collection industry into its most prosperous stage, so it is shortsighted how many firms have yet to implement these new processes.


The often acrimonious discussions between debtors and collectors are, in part, a result of poor communication and poor technology. The last thing both parties want is a need to go to court in order to resolve the payment issue. As there is no sign of debt slowing down any time soon, it is necessary for collectors to modernize their methods in order to adhere to their debtor’s way of life and minimize the possibility of involving the legal system. By providing customer-friendly, simple, collaborative and mobile ways to understand and address debt, collectors can match their debtors lifestyle. Specifically, new technologies can remove the friction from many collection calls and move calls quickly towards collaborative resolution.


So while each collector has their own processes and tactics, it is clear that they need to make their collection processes relevant for today’s new debtor. For that, it means they need to be able to connect with debtors wherever they may be, create a collaborative collection dialogue and enable instant action and repayment.


  • Need to be able to work with debtors no matter where they are. With more and more people without a landline, it’s critical to be able to engage debtors even if they are out and about on their mobile phone.


  • In today's environment, it's important to establish a collaborative debt collection process. As many debtors are reluctant to concede with the process, it is critical to establish rapport with them and use multiple means to move collections forward towards an amicable resolution. While on a call, debt collection agencies can both guide and encourage debtors with documentation and supporting calculation towards reaching an agreeable payment plan.


  • As a result of the difficulty and often tension involved in collection, it is critical to make processes as friction-less as possible. This means that document exchange, repayment plans, and calculations need to be shared in real time - without the need to run around and get documents printed or scanned. Maximize your time on call and maximize results.


REMINDERS - Make Them Easily Actionable

When a debt is owed, the first step normally involves numerous attempts at contacting the debtor. The first-party, or original lender, seeks to get in touch with the debtor through various means. In the UK, the steps are as follows, a “friendly reminder, formal reminder, harsh reminder, [and a] court warning,” granting each reminder a seven day time-frame for completion until the next is sent (Mueller). This payment process could be expedited if companies took advantage of the technology that cell phones provide. Rather than wait for a customer to receive a notice, an outdated form of communication, companies can reach their client directly through their mobile device. While complying with the Financial Conduct Authority, the process of debt collection can be strengthened if customers respond on mobile to directly fulfill these payment requests. Take away the middleman of paper and get straight to the point.

LETTER BEFORE ACTION: Make It Easy For Debtors To Act

If the debt has not been paid after a certain period of time, the debtor will receive a Letter Before Action (LBA), “a formal letter that requests the payment of a debt to your business and warns of the imminent issue of a court claim” (Lovetts). This is necessary to outline the time-frame the debtor has to pay their dues, typically 7 days. Without this step, no further legal action can be taken. Although this is standard debt collection process, most clients are on the move, without access to a fax machine or paper on hand to respond to the request in a timely manner. The process of contacting the debtor with a reminder as such is once again, is outdated. After reminding the debtor of their overdue payment, debt collection companies risk ending up in a daunting cycle of reminders after they get in contact. This method is inefficient by nature as it lends itself into a multi-step process. Rather than leaving debtors alone to panic, DCAs can make it easy for them to settle their dues. For example, DCAs can include 1-click technology that provides access for debtors to easily calculate repayment schedules and sign up for debt management programs.


Through the use of technologies, a debt collection process can be re-imagined to be more efficient. They can ensure that they are effective anywhere their debtors are, collaborative in their approach, and instantly move discussions along the lengthy collection process. Some of the core areas that debt collection agencies have applied this to include: real time and collaborative repayment plans, approval of repayment terms and conditions, and even in-call, instant payments. Within these areas, collectors can communicate with the debtor while payments are being processed to facilitate any potential confusion that may arise. Thanks to Lightico and the technological progression, collection agencies can facilitate collaborative collection discussions- no matter where customers are that consistently lead to agreed plans, direct payments and increased collections. New call-to-action

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