As companies grow larger, acquire more customers, small or big, they are consistently faced with the dilemma of cash flow to manage operations and cover costs. Any outstanding amounts as debts owed to the business add to the woes. As debts, over weeks and months, pile up, the customers further delay payments. A measure of liquidity risk is important for a business. This results in the challenge of debt recovery to keep the business afloat and on plans. But the process of debt collection is a tedious one and often deviate the business from its core activities of running and expanding their business operations. This has led to debt recovery services being outsourced to BPOs specialising in the same. Debt collection services are part of a specialised process with enhanced strategies and a debt collection agency would be best placed to help you with this. A debt collection company hires, trains and groom executives who specialise in the processes, and use the most effective strategies to recover your debts for you. Their experience would definitely help you. Considering debt collection outsourcing would be a viable option for a business if faced with a situation of spending time and money to recover amounts without much success. As the service provider activates an accounts receivables collection process, you are likely to reap the advantage of a better cash flow and recovery of due amounts. The debt collection agency activates a number of debt recovery strategies, seven of which are listed here.
1) A single authority is assigned for debt collections services
It is imperative that the efforts are aligned and performed by one single authority, rather than using scattered efforts by different teams. From the start of the collection process to recovery or abandonment, only a single collection management needs to be active, clearly defining a dedicated team for the processes. This helps in consistency and accountability, making changes in efforts when required, better cost control, and results into an effective approach to debt collection.
It is imperative that the policy followed by the collection management is defined by a central authority ensuring compliance and efficiency in the process. When outsourcing this, the policy needs to be clear and the reporting formats should be clearly structured.
It is one of the most important tasks to track down hard to find debtors. Experience, tactics and use of technology to do so will ensure higher chances of success.
It is important that the communications and action for those in the early delinquency stage are different from those where litigation is involved. The pressure applied must be progressively phased from a soft approach to pre-litigation, litigation and recovery. Allow some ad hoc approach in certain cases, but the overall strategy needs to be consistent with the policies.
Use people as resources but ensure you don’t go overboard with expenses. It is crucial that metrics like the number of accounts to be worked on, the account to collector ratios and shift management is optimised to ensure costs don’t go overboard. Using an established and specialised BPO for your Debt Collection Outsourcing ensures your capacity is elastic into being expanded or squeezed as per needs. It is imperative to define a dedicated resource approach or a pool of individuals being assigned to the task for debt collection from a particular customer. It is also important to use different channels of communication from phone calls to emails, SMS, auto diallers, apps, or a physical approach when required.
A customer may have different stakes with your organisation as multiple accounts run under a customer profile. It would be wise to differentiate an account level approach and identify when the customer level approach needs to be activated, thus emphasising on keeping the relationship healthy.
Once you identify the profile and how much is recoverable, it would be crucial to approach different accounts with a bespoke approach but in line with the central policies laid out. A gains percentage model with the recovery agency would also give you more benefits.
The above strategies will help you define your way ahead and get the required cash flow with an optimised debt collection process. Strategies are key to debt collection. Use your decisions wisely and you will optimise debt recovery services. Using the right approach in a timely structured manner will give you more traction while keeping stakeholder relationships as secure as possible and keeping debt collection costs to an optimum level.
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