Debt collection is one of the critical areas supporting an organization’s revenue. Growing consumerism has created a lot of new opportunities for lenders. However, as the loan and finance sectors rise, bad debt does the same. And recovering the bad debt is getting increasingly challenging for debt collectors.
In the United States alone, consumer debt has increased to USD 15.23 trillion (2021) since the Great Recession in 2009. The COVID-19 pandemic has made it more difficult to recover debts. Stringent collection laws govern debt collection practices. The state officials and regulators are further imposing restrictions on debt collection to minimize the financial burdens stemming from COVID-19 on consumers.
Today, the cost of collections is at an all-time high for both 1st and 3rd party collections entities. The situation is not expected to improve soon, given the rise in employee wages and new regulatory requirements that impact collections costs. Apart from that, there is a chance of increasing collections volume after COVID-19 virus-related financial relief programs are discontinued.
However, businesses can manage accounts and ensure better collection with proper processes and tools. Automation can help debt collection agencies and the in-house debt collection process in the present situation. It will not be an exaggeration to say that automation today is the key to collection success. Just take a look quick at the key benefits automation adds to the collection industry:
Key Benefits of Automation in Collection
Optimize Staff Efficiency
When you can automate a part of the debt collection process, it can reduce the need for manual intervention and manual labor. This way, the debt collection agency will operate with limited staff who can focus on handling complex collection issues instead of doing repetitive and monotonous tasks.
Minimum Human Error
When a debt collection agency automates its collection process, it minimizes the possibilities of human intervention during the collection process. As a result, human errors during such intervention are also minimized, promoting error-free collection calculations required to ensure better collection and customer satisfaction.
Reduce Compliance Issues
With automation, it is possible to adhere to the latest compliance and regulations in the collection. As a result, you can easily reduce compliance issues and ensure a compliant collection with no possibility of human errors.
Using the right automation tools and processes, it is possible to send the delinquent accounts recovery mails at regular intervals automatically. The timely communication works as a reminder to the delinquent accounts to clear their debts on time. Furthermore, with the automated process, no time is wasted in manually sending the emails and texts, resulting in a better and timely collection.
Tracking Collection Performance
With the right tools and technology, you can easily track the collection performance of your delinquent accounts. Using automation and digital transformation tools, you can track individual collector performance and make data-driven decisions.
Better Focus on Delinquent Accounts and CX Delivery
Digital tools can help reduce the pressure of routine work on debt collectors. As a result, they can reduce the complex issues regarding your delinquent accounts and offer personalized assistance to these customers to work out a solution. It results in a faster and more streamlined collection that adds to the revenue while also offering a superior CX during the collection process.
Significantly Bring Down the Cost of Collection
Digitization can significantly bring down the cost of the collection with optimum usage of staff, minimum human error, and data-driven outcomes.
Though organizations often have data points from their delayed accounts, they fail to use them effectively. As a result, when organizations attempt to collect the bad debt through a debt collection agency, they don’t have the right tools and channels for delinquent clients, causing them to fall into a dangerous spiral by collecting too little information.
Leveraging automation can make the debt collection process of your collection agency more efficient and reduce compliance litigations. In addition, debt collection automation systems can break through the siloed infrastructure and legacy systems while also bringing down the cost of operations. Today, many lending businesses and debt collection agencies realize the benefits of automation in the collection and are opting for digital adoption. As a result, we will see automation becoming an integral part of regular collection operations soon.