• There are 9 MILLION families facing negative equity in their homes.
• There will be an estimated 1.9 MILLION repos this year- up 15% from last year.
• 34% of consumers with a scoreable credit report have at least one collection item.
• Mortgages made after Jan. 2005 to prime consumers already have an 8.5% delinquency rate. That is up 491% from mortgages made previous to that time frame.

So, what must we do in our “collections” world to be ready for what may come next? 2008 has been full of tumult, no one really knows what will come in 2009. I began to look at things I have been doing and realized it has helped. I will list some of these things and a few others that we all should consider.

First: Look at every area of the collection process within your group. Ask these questions; What can we do better and/or with less resources? Can we eliminate a step or two and make the process faster? What are we doing that is really not giving us a return? No payments/money coming back for the effort expended? If you can’t track it and it is not “required” – you may want to modify or stop it.

Second: In order to apply individual pre-planned collection action to each account as needed, consider segmenting your list by assigned risk levels. You may already do this by name and known payment habits. But consider assigning a user field with a service level code that will immediately indicate what step of the collection process is taken when the member/debtor goes past due.

For instance, when Mr. Jones comes past due, we know he has not responded to system generated notices. Key him out of the process and begin calling him at 5 to 10 days past due. Don’t waste time or valuable resources on a known factor. Alternately, if Ms. Smith pays consistently at 15-20 days and self cures before 30 days, you may want a notice for her at 23 days past due. This process may take time to set-up, but even a savings of 10 to15% in postage and printing costs will be worth the effort.

These codes can be developed from payment history for those with history or codes from the underwriting process can be equated to collection service codes. All this in order to better manage the limited resources most every collection department is faced with in these times.

I would also recommend collection review meetings weekly and not just monthly. Review the phone scripts and verbiage that you are using. Consider re-vamping and applying tighter standards to better fit the economy you face. What are the answers to excuses and delays you are getting now? Close the “loop of grace” that is extended after the grace period. Begin shorter follow-up times after a broken promise. Call that afternoon or next day at the latest for someone who did not bring you a payment. I look to call between 3:00PM and 4:00PM for members that are to show up that day by 5:00PM.

We all must consider this the “Real Deal”. People are predictable in numbers and not as individuals. So, if your first efforts don’t produce results on the first member, don’t give up. Collections is applying certain types of pressures to certain individuals to obtain certain results. The results are only certain if the pressures are consistent.

If you have altered or changed some things in your collection process and would like to share them, we would be glad to publish what has worked for others in order for as many to benefit as possible from new techniques. Email us with your hints and helps.

Technorati Tags: Collection Techniques, Review Your Process, Save Time/Money

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The phrase “move the fence” means to move the line back a few days. If at 35 days you start looking at accounts, then start looking at 28 days. If you don’t even get serious before an account goes 45 days, the move your line back to 30 days and start working accounts sooner! My goal is to look at every account that is 12 to 15 days past due to spot trouble and get ahead of it. There are many ways to do this and it may take a combination of several of them to accomplish the goal. You may have to reassign duties to other collectors. You may have to work one more night a week or a half day on Saturday. You could start sending the personal collection letters sooner and drop one of the automated notices. You could use automated phone calls through our website – www.auto-dialer-solution.com But, the entire process will be good for you and the Credit Union/Financial institution as a whole. Here is what you can expect as some of the benefits for moving the fence and start working accounts sooner…

• The Speaky Wheel Gets the Grease! It is true! When you squeak earlier and longer you get the member’s attention and their payments.
• You must train your members to pay you sooner. You teach them by your attitude and sense of urgency. When your attitude of what is acceptable changes, then they will know and act accordingly. Remember, people are predictable in groups not as individuals.
• Major Benefit: if you “rehab” a member so they start paying under 15 days past due and something happens to their finances, you have more time to help them than if they were floating at 45-50 days past due. 

The extra effort is always worth it. Avoid the last minute collections on the last day of the month that make the job so much more stressful. Start moving the fence first in your thinking and then in your actions. Make a list of steps to retrain your members to pay on time and start making the changes- today. Get help. Pull others in and help them see how the entire Credit Union will benefit from these steps. We often need to train front line staff to properly convey the importance of paying loans on or before the due date. Do not train your members to relay on the grace period before they pay!

It is important to take these steps now. As volatile as 2008 has been, who really knows what will happen in 2009? Please, don’t ignore this advice and regret it in July or August of 2009…..

Technorati Tags: Attitude, Collection Techniques, Evaluate

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Technorati Tags: debt collector attitude, debt collector manners

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