The market size of the Debt Collections industry in the US has grown 3.3% per year on average in the past five years. In 2021, this growth is expected to reach 4.4%.
The future of the Debt Collections industry is looking good.
But growth and opportunity come at the cost of increased competition. And to stay ahead of this competition, you need a solid strategy.
A leading strategy consultant serving the debt collection industry, Jeffrey Hartman lists four keys to a successful collection strategy. They are:
- Customer-oriented operations
- A centralized debt collection system
- Applied analytics
- Up-to-date communications.
In this post, we’ll talk about the lowest hanging fruit, i.e., up-to-date communications.
For collection call centers, an up-to-date communications system helps you:
- Automate your debt collection process,
- Improve customer experience,
- Deliver consistent results, and
- Cut costs.
But what does an up-to-date communication system consist of? What tools should you have at your disposal, and how to use them? This post answers those questions.
What is a debt collection call center?
A debt collection call center is a dedicated space and group of people specializing in pursuing outstanding or overdue debt.
Being more specific about how they function, people working in a collection call center get in touch with debtors to negotiate and recover what they owe.
There are two types of debt collection call centers which include:
- First-party collection centers: These centers are a part of an organization and only work to recover debt for that organization.
- Third-party collection centers: These are independent businesses that collect on behalf of other organizations. They are not limited to any one company.
Third-party collection centers (also known as debt collection agencies) typically charge a percentage of the debt they recover.
Debt purchasing, in which the agency buys the debt from a business (that it may be unable to recover), is also a popular model among agencies. In this case, they pay a fixed amount for the debt and keep everything that they recover.
Debt collection call centers serve (or are a part of) any institution that gives out credit in cash or kind. These include, but are not limited to:
- Banks and other financial institutions
- B2B businesses
- Retailers and wholesalers
- Insurance companies
- Healthcare organizations.
Note that a collection call center is only a part of a debt collection agency or department.
Other aspects that debt collection centers consist of include:
- Skip tracing: Tracking down debtors who stop responding to your communications.
- Accounting: Managing and keeping track of transactions and debt.
- Legal: To help you send final notices and take legal actions in small claims courts.
- Business (for third-party centers): To convince organizations to hire them for collections work or sell their debt.
But, call centers are the drivers of debt collection work since the entire process relies on outreach. Let’s see how.
Debt collection process
Whether it’s a first-party agency or a third-party agency, the steps involved in debt collection are similar. Here’s what it involves:
Payment due notice with an invoice
This friendly payment reminder is typically sent a couple of days before the payment is due. It’s accompanied by an invoice that includes:
- A unique identification invoice number
- Company name, address, and contact information
- Debtor’s name and address
- Total amount due
- Due date
- Payment method.
You can send this reminder by email or mail. To ensure that the debtor notices the message, you can send them a nudge over text or let them know over a call.
Payment overdue reminder
Past the due date, debt collectors send another reminder. This reminder highlights that the payment is overdue and asks the debtor to clear it as soon as possible.
The content of the reminder should include:
- The number of days the payment was overdue.
- Details of the last communication you sent.
- A copy of the invoice (or the attachment of the previous reminder).
- Your contact details (in case they want to get in touch with you).
You can convey these reminders via email or even over a call. Nowadays, with the high open rate of texts, even text reminders work great for these.
Outreach via phone call for negotiation
If your previous communication attempts couldn’t get a reaction from the debtor, there’s a good chance that the debtor is not in the position to pay you back.
At this point, you’ll need to get in touch with the debtor over a call to negotiate the payment terms. This conversation highlights:
- Any flexibility from your side regarding the payment plan.
- Possible action you may have to take if you don’t receive the payments.
- Your history of communication with them (reminders).
Make a note of everything you talk about and sync this information in your CRM to inform future interactions.
After your negotiations, subsequent efforts would involve reminding the debtor about pending dues and collecting the amounts, similar to your initial reminders.
There isn’t much difference between these reminders and the ones you sent earlier, except that the content now would be more aligned with the renegotiated terms. However, at this point, you can be a little more firm with your tone. Just make sure you don’t come off as threatening, though.
These reminders can be either voice broadcasts, text reminders, or even a quick call. Make sure these reminders highlight:
- Payment due date and amount.
- Link to make the payment.
- Your contact information for them to get in touch if they have any issues.
If the debtor doesn’t come through after repeated reminders, the collector sends a final notice. This is the last warning for the debtor before the collector takes legal action.
If they are forced to take legal action, the responsibility is passed on to the legal team. However, if the debtor is unreachable, the case is assigned to the skip tracing team, which tries alternative methods to reach out to the debtor.
What kind of communication tools do collection call centers need?
The brief of the debt collection process above would have given you an idea that there are two types of communication tools that collection call centers need:
- Calling tools
- Reminder/follow-up tools
Let’s dive into the details of each.
Debt collection call center calling tool.
For debt collection, the tool that you should be looking for is a cloud calling solution. Cloud calling solutions have many advantages over bulky PBX systems like:
- They have no significant infrastructural needs and can be set up in minutes.
- No maintenance costs.
- Can be set up remotely, so you don’t even need a physical space.
- Easily scalable.
- Have more advanced features like contact tagging (based on the call outcome), automatic callback, answering machine detection and voicemail drop, etc. Such features make debt collection outreach more efficient.
The perfect cloud calling solution for collection agencies is one that also has the following features.
- Multiple auto-dialer options for more control over calling speed.
- Call scheduling and retry limits to make TCPA compliant debt collection calls.
- Call dispositions to mark call outcomes like callback at a specific time, unresponsive contact, wrong number, etc.
- Dynamic caller id to display a local number on the debtor’s phone and increase their chances of picking up.
- Automatic voicemail drop for answering machines.
- Voice broadcast system for quick reminders to an extensive contact list.
- Easy integrations with your CRM or ARM to import and export contact data.
- Calling campaign and caller activity reporting and insights.
Each of these features is important to help you make efficient automated debt collection calls.
Debt collection call center reminder/follow-up tool.
For follow-ups and reminders, the two most effective solutions that you should be looking at are:
- Email marketing solution
- Text marketing solution
Emails will be used for detailed conversations like payment due reminders with an invoice, a summary of a phone conversation, or general updates.
Texts, on the other hand, have a character limit but a very high open-rate (98%). This makes them perfect for quick reminders and alerts. For example, a due payment alert with a payment link, a nudge to the debtor to keep an eye out for an email or a letter you may have sent, etc.
Here are a few must-have features for the email marketing software:
- Simple drag-and-drop email builder.
- Email journey builder to send emails automatically based on different actions taken by the debtor.
- Contact segmentation and tagging.
- Email campaign reporting and analytics.
Your debt collection SMS marketing software must have the following features:
- SMS/MMS scheduling and broadcast features.
- Message personalization with merge tags and custom fields.
- Automatic SMS reattempts for undelivered messages.
- Easy integration with CRM for contact management.
- Text campaign reporting and analytics.
- A link tracker to check clicks.
Whether you’re a debt collection agency or a first-party debt collector, these three solutions form an essential part of your debt collection strategy.
Putting the collection call center communication tools into action
Here’s a quick overview of how to use these communication tools for debt collection.
Cloud calling solution
- Upload contacts: Upload your list of contacts to the cloud calling tool. Alternatively, you could even import all contacts from your CRM or ARM.
- Rent a number to make calls: You can rent a local number to increase the chances of calls being picked up (since people are more likely to pick up calls from local numbers).
In CallHub, the Dynamic Caller ID feature automatically rents local numbers and assigns them to the callers depending on the region they’re making calls to.
- Select the right auto-dialer: The auto-dialer you choose depends on the speed of calling you wish to achieve.
If your conversations are going to be quick (like a reminder), then you can go for the Predictive Dialer that lets you reach 400% more contacts per hour. For lower volume and more detailed conversations, you can choose the Power Dialer.
- Craft your calling script: Craft a debt collection calling script for different scenarios like reminders, negotiations, follow-ups, etc. A calling script guides the conversation and ensures the caller doesn’t leave out critical details.
Check out our guide on Debt Collection Calling Script to learn how to craft one.
- Start making calls: Just click the dial button, and you’re all set. Make sure to make a record of how each conversation goes.
In CallHub, you can mark the outcome of each call using call dispositions. You also have a text box in the calling dashboard to take down notes during the conversation. These notes and dispositions help inform future interactions with the debtor.
- Upload your contact list: It is quite similar to the cloud calling solution process— you can either upload it to the tool directly or import it from your CRM.
- Rent a number: This number will be used to send texts. For SMS, you don’t really need a local number. Just one ten-digit long code would work well. In CallHub, you can rent this number from the dashboard itself.
- Draft the message content: You can create message templates for different scenarios and schedule them beforehand. Check out our guide on Debt Collection Message Samples for some templates that you can use.
- Send the messages: Well, you don’t really have to send the messages manually. The tool automatically sends them at the scheduled time 😉. You can just go through the reports and insights every time a set of texts are sent out.
- Create an email journey: The email journey informs the tool what kind of email should be sent based on a particular action or time. For instance, at the start of every month, all debtors can be sent a payment invoice.
- Craft email templates: Create templates for each stage of the journey like invoicing, payment reminder, final notice, etc.
- Import contacts: Import all contacts from your CRM or ARM or directly upload them to the tool (if possible).
- Publish the journey: Once everything is in place, just publish the journey, and the tool takes it further automatically. Make sure that you regularly track and analyze the performance of the emails and keep making changes to test what works best.
While some of the steps above may differ depending on the software, most of the process is the same.
Efficient communication is the foundation of collection call centers, and the right technology is what empowers it.
Hopefully, this post helped you understand exactly the kind of technology you should be looking for to facilitate efficient communication.
The next step would be to look for tools that fulfill the criteria we mentioned above.
You can start by checking out CallHub, a comprehensive communication tool that offers both texting and cloud calling solutions in one platform. Sign up to CallHub for free and take a 14-day free trial to get a more hands-on experience of it.