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Best Practice in Consumer Collections
Strategies and Technologies for Consumer Debt Recovery

Best Practice in Consumer Collections Strategies and Technologies for Consumer Debt Recovery

Subprime

For some commentators, the subprime collapse is simply the end of a long growth cycle, of banks pushing into higher risk markets as they seek out new earnings and reaching the limit (or end) of that particular growth model. For pessimistic commentators, the subprime collapse may prove much more profound - a stop to a debtfuelled, debt-riddled USA economy that could take years to 'correct'. The main problem is that nobody knows exactly how far or deep the market 'weakness' will run. Approximately $50 billion in bad loan write-offs had been revealed by banks at the end of 2007, although the final figure is estimated to be much higher.

Expert Opinion

This updated report, written by an industry expert with over 27 years of experience, provides a comprehensive assessment for both new and seasoned collection professionals. The examples and case studies in this report are drawn from her international consulting and training experience and address a wide variety of collection issues including all phases of consumercollections from early, mid and late stage delinquencies to charge-offs. This second edition has an important update about multichannel technology and communication tools which are essential in contacting today's debtors as well as an in depth summary of Subprime collections.

The report is applicable for the collection of unsecured and secured products, including:

  • Credit cards
  • Loans
  • Telecommunications services and other financial services

Leading edge strategies, state-of-theart technology, samples of collection metrics, reports and best practice operational processes are included in the report and are presented in an easy-to-read format including tables, charts, bulleted lists in answer to complex collection management issues, for example:

  • Setting up a collection call centre
  • Defining an optimal organizational structure and requirements for each functional area
  • Organizing a multilingual collection process
  • Improving third party agency management

Challenges for Senior Management Senior collection management, whether they are responsible for ten collectors or thousands, will find this report an invaluable information resource when considering core strategies including:

  • Centralizing their collection operation
  • Assigning accounts to an offshore outsourcer
  • Selling charged-off distressed accounts receivables

New Technology Technology has become a critical success factor in consumer collections due to the high volumes of accounts handled. This report presents a detailed assessment of cutting edge tools along with the ideal features of each technology including:

  • Choosing a predictive dialer
  • Scoring models, IVR's
  • Best-time-to-call software

Human Resources

Successful collection is an intensive personnel-driven process and to achieve targets and goals, the collection management team must understand the dynamics of team management. This report provides Best Practices for recruiting, hiring and staffing, managing according to the 3 M's of collection management: monitoring, measuring and motivating, and tips for training collection staff on effective collection negotiation skills and techniques.

The new edition of this best-selling report offers a comprehensive examination of the entire consumer collection process and is a must for new and experienced collection managers alike.

  • The report presents:
  • Extensive coverage of Subprime collections, plus debt sales, offshore outsourcing and multilingual collections
  • The opportunities provided by multichannel technology tools
  • Many case studies of strategies, processes and application of technology from the author's consulting experience
  • The definitive A-Z of collections

Why buy this Report

The rapid acceleration in mortgage and consumer loan defaults in the USA and beyond throughout 2007 and early 2008 (primarily from the subprime credit rated segment) brought an abrupt end to a decade of unprecedented retail banking growth around the world.

Who should buy this report

Credit Policy Director, Collection Director, Credit Risk Director, Portfolio Director, Recovery Director, Credit Manager, Collection Manager, Credit Risk Manager, Portfolio Manager, Recovery Manager

  • Introduction to the second edition
    • Make it easy for your customers to pay
    • Recurring payments
    • Handling billing inquiries and disputes
    • Multi-channel and self-service collection tools
    • Automated voice messaging
    • Text messaging and e-mail
    • Web-based payment portals
    • Mobile transactions
    • Multi-channel contact management systems
    • Beware pitfalls and optimize benefits
    • Sub-prime collections
    • Understanding sub-prime debtors
    • Account segmentation
    • Elements of sub-prime collection strategies
    • Sub-prime collections technology
    • Summary
  • Executive summary
    • Consumer credit lending boom
    • Role of collections in the consumer credit cycle
    • Objectives of consumer collections
    • The business of consumer collections
    • Strategy
    • Technology
    • Measurements
    • Functional areas
    • Organizational structure
    • Tactics
    • Supervision of the collection staff
    • Collection negotiation techniques
    • Charge-off, recovery and debt sales
    • Critical success factors
    • Future trends
  • Chapter 1: Overview of consumer collections
    • Objectives of consumer collections
    • Collection efficiency model
    • Strategies
    • Technology
    • Measurements
    • Operational processes
    • Collection negotiation Skills
    • Collection regulations/privacy laws
    • Summary
  • Chapter 2: Strategies: segmentation tools
    • Definition of a collection strategy
    • Documentation of the collection strategy
    • Preventing delinquencies
    • Automatic payments
    • Pre-collection tools
    • Collection stages
    • Ageing buckets
    • Stages
    • Segmentation
    • Strategic elements
    • Decision Trees
    • Risk Indicators
    • Differentiation of treatment by risk
    • Other strategy tools for secured collections
    • Pay habit scoring
    • Late charge policy
    • Returning partial payments
    • Sub-prime accounts
    • Summary
    • Best practice strategy drivers
  • Chapter 3: Technology tools
    • Technology's role in collections
    • Adaptive control systems
    • Collection behaviour scoring
    • Credit bureau scores
    • Collection systems
    • Queuing
    • Predictive dialling systems
    • Predictive vs. manual dialling
    • Functionality
    • Other useful features for collections
    • Interactive voice response systems
    • Best-time-to-call software
    • Call monitoring systems
    • Workforce management software
    • Post-charge-off management systems
    • Summary
  • Chapter 4: Measurements and key performance indicators
    • Introduction
    • Collection portfolio measurements
    • Delinquency rates
    • Inventory reports
    • Roll rates
    • Charge-off rate
    • Lagged delinquency and loss rates
    • Collector performance statistics
    • Summary
  • Chapter 5: Functional areas
    • Functional areas in consumer collections
    • Early-stage
    • First payment default
    • Current and over limit (credit card accounts)
    • Very low balance
    • Very high balance
    • Mid-stage
    • Debt relief programmes for unsecured accounts
    • Debt relief programmes for secured loans
    • Management and control of debt relief programmes
    • Late-stage
    • Recovery and post-charge-off
    • In-house recovery
    • Third-party collection agency assignment
    • Skip trace
    • Collection support
    • Asset recovery and sales
    • Summary
  • Chapter 6: Organizational structure
    • Best practice organizational chart
    • Collection manager
    • Technology manager
    • Strategy and analytics manager
    • Training responsibility
    • Collector account assignment: ownership vs. pooled
    • Cradle-to-grave account assignment
    • Pooled assignments
    • Capacity planning
    • Considerations for inbound call capacity planning
    • Accounts-to-collector ratio
    • Predictive dialer capacity planning
    • Case study: using capacity planning formulas on
    • predictive dialing technology
    • Centralized vs. regionalized operations
    • Critical success factors for centralizing collection processes
    • General considerations for setting up a collection call centre
    • in a new location
    • Call center site requirements
    • Summary
  • Chapter 7: Operational strategies and tactics
    • Timing of collection activities and number of attempts
    • Intensity rate
    • Inbound and outbound calling
    • Case study: dedicated inbound strategy with IVR
    • Case study: dedicated inbound vs. blended environment
    • Strategic approaches for predictive diallers
    • All stages of delinquency
    • Selecting the appropriate accounts to work
    • Differentiation of treatment
    • Productivity and effectiveness
    • Dialler measurements
    • Five ways to improve promises per hour on a predictive dialler
    • Written communication tools
    • Summary
  • Chapter 8: The three Ms of collection management
    • Introduction to the three Ms
    • Monitoring
    • Measuring
    • Motivating
    • Call monitoring
    • Types of call monitoring
    • Call handling
    • Evaluating the call
    • Frequency of call monitoring
    • Using a call monitoring checklist
    • Measuring
    • Building a balanced score card step-by-step
    • Using balanced score cards as a management tool
    • Strengths of daily measurement tools
    • Motivating
    • Five actions to get a higher payback from collection incentives
    • Tips for implementing incentives
    • Non-monetary and recognition awards
    • Summary
  • Chapter 9: Recruiting, hiring and staffing
    • Recruiting
    • Seasoned or green?
    • Screening
    • Hiring
    • Full-time versus part-time
    • Staffing best practice for collections
    • Employee absenteeism and punctuality
    • Turnover
    • Summary
  • Chapter 10: Collection techniques
    • Collection call model
    • Sample call model: the 'Vital Five'
    • Step one
    • Step two
    • Step three
    • Step four
    • Step five
    • The challenges of multilingual collections
    • Best practice in multilingual collections
    • Summary
  • Chapter 11: External collections
    • Basics of external collections management
    • 1. Agency selection
    • 2. Contract terms
    • 3. Accurate and timely measurements
    • 4. Creditor's active participation
    • Pre-charge-off third-party assignment
    • Offshore outsourcing
    • Post-charge-off third-party assignment
    • Recovery segmentation best practice
    • Placement strategies and reporting
    • Audits
    • Summary
  • Chapter 12: Debt sales
    • Brief history of debt sales
    • Entering the debt sales marketplace
    • Key success indicators in debt sales
    • Determining the value of the portfolio
    • Debt valuation scoring
    • Strategies
    • Preparing for the sale
    • Account selection and preparation/seller due diligence
    • Portfolio evaluation
    • Seller due diligence checklist
    • Broker support
    • Post-sale servicing
    • Back office requirements for post-sale servicing
    • Purchase and sale agreements
    • Key elements to limit seller's exposure
    • Reasons why sales go 'bad'
    • Glossary of terms for debt sales
    • Summary
  • Chapter 13: Collections best practice
  • Chapter 14: The future of consumer collections
    • Dramatic increase in unsecured consumer debt and personal bankruptcies
    • Improved availability of reliable credit bureau information for
    • credit granting and skip tracing
    • Improved communications tools
    • Products, services and tools available by internet
    • Summary
  • LIST OF TABLES
    • Table 2.1: Collection stages and business objectives
    • Table 2.2: Ability to collect by stage
    • Table 2.3: Risk matrix
    • Table 2.4: Differentiation of treatment by risk
    • Table 2.5: Pay habit score example
    • Table 2.6: Prime vs. sub-prime strategies
    • Table 3.1: Collection stages and business objectives
    • Table 3.2: Sample collection treatment strategy, 1-89 days past due
    • Table 3.3: Application of collection treatment by risk, 1-89 days past due
    • Table 3.4: Predictive dialing system functionality
    • Table 3.5: Predictive dialer best practice benchmark measurements
    • Table 3.6: Call monitoring systems functionality
    • Table 3.7: Workforce management software functionality
    • Table 3.8: Call monitoring systems functionality
    • Table 4.1: Calculating delinquency rates by number of accounts
    • Table 4.2: Sample collection inventory report
    • Table 4.3: Calculating roll rates
    • Table 4.4: Benchmark roll rates
    • Table 4.5: Tracking and frequency of key pre-charge-off collection performance indicators
    • Table 5.1: Functional areas in consumer collections
    • Table 5.2: Mid-stage delinquency collection tools
    • Table 5.3: Sample of debt relief programs for unsecured accounts
    • Table 5.4: Sample of debt relief programs for secured loans
    • Table 5.5: Skip trace account assignment strategy
    • Table 6.1: Collection management team
    • Table 6.2: Account ownership
    • Table 6.3: Pooled account assignments advantages and disadvantages
    • Table 6.4: ACR benchmarks
    • Table 7.1: Sample simplified contact time line strategy
    • Table 7.2: Intensity rate example, credit cards
    • Table 7.3: Sample Monday call schedule, prime accounts
    • Table 7.4: Case study dedicated inbound vs. blended inbound/outbound
    • Table 7.5: Best practice productivity goals by collection stage
    • Table 7.6: Sample collection letter strategy
    • Table 8.1: Selecting balanced score card indicators
    • Table 8.2: Determining target goals
    • Table 8.3: Assigning weights
    • Table 8.4: Calculating a score
    • Table 8.5: Collector recognition and rewards
    • Table 9.1: Staffing options for collections
    • Table 10.1: The 'Vital Five'
    • Table 10.2: Describing the benefits of payment
    • Table 10.3: Sample of information collectors require to get a 'kept promise'
    • Table 10.4: Common collection notes abbreviations
    • Table 10.5: Best practice for multilingual collections
    • Table 10.6: Sample Spanish language credit and collection glossary
    • Table 11.1: Best practice for analyzing offshore outsourcing for collections
    • Table 11.2: Best practice for external collection agency management
    • Table 11.3: Sample segmentation parameters for charged-off accounts
    • Table 11.4: Monthly batch track sample report
    • Table 11.5: Cumulative batch track sample report
    • Table 11.6: Monthly collections agency audit criteria
    • Table 12.1: Account segmentation for debt sales
    • Table 12.2: Estimated value of credit card debt sales in the US
    • Table 12.3: Glossary of terms for debt sales
    • Table 13.1: Collections best practice
  • LIST OF FIGURES
    • Figure 1: Increasing the number of recoveries
    • Figure 1.1: The Collection Efficiency Model
    • Figure 2.1: Collection flow chart
    • Figure 2.2: Sample collection decision tree
    • Figure 2.3: Recommended distribution of risk for Buckets 1-3
    • Figure 4.1: Is/was reporting
    • Figure 4.2: Lagged loss rate equation
    • Figure 5.1: Early stage collection strategy
    • Figure 6.1: Best practice organizational chart, consumer collections, unsecured portfolio
    • Figure 6.2: Predictive dialler capacity plan example for outbound calls
    • Figure 7.1: Best practice distribution of wait, talking and update time on a predictive dialler
    • Figure 8.1: Sample call monitoring checklist
    • Figure 12.1:Debt valuation formula
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