Successful Strategies for Debt Collection in and post-COVID phase

Blog by Glorious Insight

Successful Strategies for Debt Collection in and post-COVID phase

The present COVID-19 outspread has influenced almost all countries around the world. Presently most of them are observing the peak of the pandemic and struggling on almost all the aspects of life and businesses. While the state of the pandemic, lockdown, and other restrictions may be different in different countries, one thing is common, economic slowdown.

COVID-19 impact on the economy is evident in every part of the world and has hit hard to public finance. People are struggling to meet their daily lifestyle needs, let alone fulfilling financial commitments. This is going to have a direct impact on debt collection. Collectors need to prepare themselves to deal with a huge number of people not being able to pay their debts in time.

Big data analytics and business intelligence are going to be the night in the shining armor for collection companies in these testing times. Accurate prediction of the consumers' financial state by analyzing legacy data and current information along with behavioral factors would give valuable insight into the likelihood of debt payments.

Glorious Insight's analytics solutions are powered with best-in-class tools. Our team of experts has an in-depth understanding of the field and a fine perception of the current state of uncertainty. This helps us deliver customized innovative tools that can be the savior for the debt collectors.

Being able to predict and segment your clients according to their ability to repay their debts can provide a great foresight. An accurate prediction can also help in making credits in the present time and evaluate the financial ability of the clients. It further helps in streamlining the debt collection post-COVID period. It would help collectors to look at least 5 years ahead and provide a vision in the future of debt collection to formulate long term strategies while coping with the current situation and meet the near-term goals.

Futuristic vision in debt collection is the pivotal

Having a vision into what the debt collectors need to achieve and why can dramatically improve the performance of the collection team. It gives the team a target to work on and keeps motivated until it is reached.

It is important for the collections to have a detailed plan of action to reach the desired goal. Thorough planning is often helpful in sudden disruptive situations like the COVID-19 impact on the economy. With a clear vision and well-thought off action plan, the team will make best efforts to stick to it and can sail through many internal and external challenges.

With experience over time and working with several businesses in various industries, we have learned that clear vision can improve their impairment results by up to 60% for the companies. At Glorious Insight, we provide analytics solutions to the collection companies to provide them a detailed insight into the clients' financial status and internal parameters. This helps them to make accurate predictions and formulate a precise and clear vision.

Reports are generated in multiple dimensions and in interactive and dynamic forms. Easy-to-understand visualization helps in building a clear perspective and goal and real-time information helps in keeping the collection operations on track to meet the goals.

Amid the COVID_19 chaos, the collection companies need to reimagine the future of debt collection and create a compelling vision to take their capabilities to the next level. They also have to accept the fact that most of their employees are going to work-from-home (WFH) for a longer period. It is a key factor while defining collection targets and action-plans as for a majority of the companies, 75% workforce is working remotely. With early adaptation to this debt collection model, more than 20% of companies are observing position impact.

Along with the analytics and ability to reach out to the clients for debt collection, the WFH model presents several other challenges as well. These are related to data security, compliance, and performance measurement. Solutions from Glorious Insight provide a real-time report of these parameters and ensure quality work was done that is assessed accurately.

Best Debt collection practices for COVID-19 period

The world is going through a bizarre situation that has presented unprecedented challenges to debt collection companies. Our teams at Glorious Insight have worked across several sectors with varied industries, geographies, and demographics. With our first-hand experience at these organizations, we have learned the possible best practices to follow to optimize debt collection.

Need to identify the vulnerable

It is important for collectors to find vulnerable proactively. Companies have to deal with thousands of clients who are hit economically and have lost their ability to pay debts. This needs unusual data collection and analytics to identify and segregate customers.

Assessment of long-term affordability

In the present time, every debt collector is facing turmoil and has experienced disruptions. For those who seek long-term forbearance, it is important to dig even deeper into the personal accounts, balance sheets, and cash flow. A continuous data collection related to the household balance sheet is a must to assess long-term affordability.

Reinventing engagement strategies

Companies have to rethink their engagement strategies and the approach they use to reach out to their customers. Contacting the right customer, at the right time, through the right channel may not be sufficient. It is important to adopt tools such as iSMS, auto voice, direct digital API, email, mobile apps, etc. Glorious Insight provides unmatched tools with exceptional efficiency and outcomes.

Customers’ segmentation

Customers in debt collection are often segmented as pre-default segment, payment protection or lockdown segment, and post-payment protection segment. In the present scenario, this segmentation needs specialized data analytics for deeper insight. Also, real-time changes in the segments need to be captured and observed to understand the customers' behavior and the likelihood of repayment.

Operation reviews

Apart from analyzing customers, companies also have to analyze their processes, policies, tools, technology, data, and management to lead into the future of debt collection. In the present time, it is important to identify the risks early and take proactive actions to either avoid them or mitigate their impact.

Stage 2: Initial implementation

A common mistake most companies make is, to begin with, back-office functions in supply chain and finances. These tasks are often the most complicated areas that include workflow in both structured and unstructured forms from various departments. High-level of complexity at the beginning of the process automation can be overwhelming and even discouraging.

It is better to start with simpler and repetitive processes such as invoice processing. Such processes mostly rely on structured data inputs and have simpler workflows. This increases the chances of a successful deployment and gives you time and hand-on experience to understand the process closely.

Post pandemic collection activities

The present pandemic and economic crisis will definitely fade away with time, but it will leave a strong impact on the businesses. The way debt collection is performed, governing policies, methods of approaching clients, performance assessment of employees, etc are going to change permanently. This forces the companies to craft a new working model for post-COVID debt collection.

Presently and even after the pandemic, there would be negative if companies try to push too hard and too fast. They have to formulate strategies that include flexible repayment options and deferrals with permits. These are more likely to deliver positive outcomes.

Also, companies need flexible and adaptable collection strategies. Not all clients are the same, so the collection strategy must be customized to draw the best results. Companies need to learn new approaches and innovate to collect with fewer staff members, distance working, and immediate recognition of opportunities to be successful.