Collection Agencies Experimenting with Technology to Deliver Results in Tough Times

Difficult times in the ARM industry have called for strategy shifts in contact operations. In addition to increasing payment plans and settlement acceptance, collection agencies are leveraging technology to get through to debtors.

Collection placements are continuing to grow, but recovery rates continue to lag as more Americans lose their job and no longer have access to assets such as home equity to pay down debt. Additionally, with many people using caller IDs to screen calls, or with no landlines at all, debtors are much more difficult to reach.

As such, accounts receivable management firms are increasingly relying on technology to maintain profit margins in the recession.

In insideARM’s most recent Credit & Debt Collection Industry Quarterly Confidence Survey, many participants said in open-ended comments that they are using various contact technologies to guide them to elusive debtors ("In Your Words: Comments from the ARM Industry Confidence Survey,” June 1).

Collection companies should follow some survival strategy guidelines in order to make the best out of the current economic environment, says Matt Edmunds, general manager for collections, for SoundBite Communications in Bedford, Mass.

“It’s much more difficult to reach people now than ever before,” Edmunds says.

Automation helps manage this issue. Edmunds recommends carefully defining a company’s automated voice messaging strategy to increase agent productivity and revenue-per-agent-hour.

“Agentless solutions (automated calls) are growing more effective and accepted and provide options for debtors to pay at their convenience,” Edmunds says, adding that it is critical to test different strategies on different segments of accounts, even within the same portfolio. “This works best for balances of under $500 and for fresher debt.”

 

Though the tight margins mean that most firms don’t have additional revenue to invest in automation and other equipment that could take time to produce a positive return on investment, collection firms can use hosted solutions in which the provider owns and maintains the equipment and the collection firm pays fees based on its usage.

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