Debt Collections

Debt Collections is an area of operations that is ready to be transformed by a coherent data strategy. Here’s how:

Much of the time, a company that manages debts on behalf of clients has a staff of collections agents in a call center with a singular technician who programs the dialing software. This technician will write a script that collects all accounts that meet the collections criteria and send them all to various agents when they are available to perform an outbound dial. This approach seems fine on the surface but unfortunately leads to very poor performance compared to industry peers.

An engagement would focus on five main objectives when transforming a collection operation:

Objective 1: Clearly define goals of the collections operation and align these with both leadership expectations and industry standards. (1-2 weeks)

• Understand industry scorecards and company’s targeted position among their competitors (defined by leadership).

• Answer the question: how well do the current objectives of the operation align with leadership’s objectives? (ie get a bead on headspace of management, daily goals, what is happening at desktop, culture)

• Define success in terms of reduction of expense, improvement of fee revenue, reduction of first time delinquency, recidivism/re-default, etc

• Discover the extent in which operations management have defined a strategy, implemented it and are monitoring daily, weekly, monthly

• Understand the resources available for reaching their goals (e.g. collections staff quantity and experience, inbound/outbound capacity (current vs capable))

Objective 2: Demystify the existing strategy. Every operation functions on a strategy, even if it is just the hope of hitting your goals! This objective is to help a firm move past “hope” being the strategy (1 week)

• If a strategy currently exists:

  • help define it clearly for senior leadership to ensure it matches the stated goals for the operation

  • Offer an assessment of the existing strategy and recommendations for improvement

• If a strategy doesn't currently exist:

  • Help define for senior leadership what we believe is governing daily operations

  • Develop a broad-based strategy plan that can help improve performance in the first month of implementation.

Objective 3: Assess the level of reporting and analysis that exists to provide transparency to stated daily and monthly strategy for collections (1-2 weeks)

• Spend a few days or longer with any management on what dashboards and reports they use to drive their ship. Talk with analysts and get eyes on current level of reporting

• Assess where gaps exist in transparency and create suggestions for an improved suite of tools, reports and dashboards to give management insights they need

• Perform a bit of analysis on performance at it stands today to provide insights to stakeholders on what the data is currently saying on health/performance

Objective 4: Address needs for a predictive model; assess quality/accuracy of existing models for governing collections (1-3 weeks)

• Entirely dependent upon the needs and stated goals of management regarding collections performance, existence of current modeling, extent of current modeling

• Dig into the mechanics of the existing model that predicts delinquency, delineate components that drive scoring, explain in clear speech how it operates (draft white paper if possible)

• Draft up a proposal for building a new model if this is needed, including expected performance gains and ROI

Objective 5: Audit the existing implementation of the collections strategy to find gaps in penetration and saturation of collection targets (2-4 weeks+)

• Build a variety of reports that unearth the reality of how the existing strategy is implemented from definition to programming to what is sent to the desktop to what calls occur and results

• Find gaps and discuss the breaks; navigate a rebuild or an improvement to the existing implementation (e.g. help re-write some code for the dialer)