How to make Debt Collection Win/Win

Jake Levant

Through the stress of a collection procedure, it should be apparent that in most cases, its in both parties interests to quickly reach a mutual agreement to pay. However, the tension and technologies in debt collection often stop parties from making the process of debt collection win/win.

Avoid court proceedings, create win/win & optimise collections

Unfortunately, this desired end of a mutual agreement to pay often comes at the end of a long, painful chase, hopefully avoiding legal intervention. After analyzing 100,000+ debt collection calls, there are a few insights on how debtors and collection agencies miss this goal, and end up in vicious, costly chase cycle.

The impacts of fear, emotion, denial, justification and poor communication play a vital part in today’s sub-optimal collection results.

Debtors want out-of-court resolution.

There are more than 1,000 County Court Judgment (CCJ) daily in the UK. So while collectors would prefer to reach an agreement with debtors, there is a fundamental flaw in the way they are currently interacting. As a result of volatile emotions and a lack of effective communication, collectors/debtors are left with nothing more than a lose/lose situation.

Debt Collection is Now Lose/Lose: A Prisoner’s Dilemma

Debt collection is currently reminiscent of the Prisoner’s Dilemma. While the best outcome is for both parties to come to a mutually agreed repayment, neither party feels they can weaken their stance without the other taking advantage of their new strength. So while both parties have interest in debt collection win/win, they often end up with lose/lose.

How Collectors can Create a Debt Collection Win/Win

Create collaborative channels

Half the battle for a collector involves getting a hold of debtors themselves. There are huge technological investments in automated dialers, contact verification and efforts invested just within this first step of contact. However, these connections are often hostile and fail to progress collections. So while it’s easier to find debtors, it’s more difficult to connect and collect.

Too many collection calls start and stop with issues of trust and accuracy. With a heightened focus on this collectors can lead more successful calls. The more successful the process, the quicker they can move from acknowledgement to action. Ultimately, the overarching goal is getting debtors to pay through an arrangement, known as a debt management program.

Move towards ”agreements to pay”

Astute collectors now use supporting tools to enable them to move beyond verifying debts and quickly into an arrangement to pay. DCAs need to use tact and technology to do so. Today, profitable DCAs must provide frontal, reassuring interactions to capitalize on the limited goodwill in debt collection.

In order to do so, they must demonstrate a balance between providing hard evidence of monies owing, and showing how there are manageable ways to pay off the debts, or a compromised portion of debt.

Ensure debtors can collaborate from no matter where they are

Collectors need to be able to work with debtors no matter where they are. With more and more people without a landline, its critical to be able to engage debtors even if they are out and about on their mobile phone.

Provide collaborative channels for debtors to step towards collectors

As many debtors are reluctant or hopeless, 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.

Ensure technologies provide ”in-the-moment” ways to move forward

Because of the difficulty and added tension involved in collection, it is critical to make these processes as frictionless 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.

 

 

debt collection