Collection Best Practices

							Collection Best Practices

        COHEAO
    Mid-Year Conference
       August 3, 2009
       2:15 – 3:00 PM
 Today’s Panel & Presentation
• John Adonnino; NCO
How to leverage technology!

• Karen Reddick; NCM
Back to the basics in Collecting!

• Bill Cantalope; ERS
Incentives & Culture Changes!
  How to Leverage Technology
• Times Have Changed
• Account Segmentation
  – Scrubbing, Scoring & Segmentation Value
• IVR (Interactive Voice Response)
• Productivity Measures
       Times Have Changed
• Agencies have always utilized automation
  & technology.
• More critical now, than ever, in today’s
  challenging economic climate is to utilize
  and leverage all types of automation and
  technology to meet four goals:
              Four goals!
– Perform Competitively

– Remain Compliant

– Operate Efficiently

– Increase Profitability
          Account Segmentation
 Segmentation – Proprietary automated tool that leverages
  internal and external (credit bureau and public records) data
  to help predict account repayment probability with a high degree
  of accuracy.
 Objective - Accounts are sub-grouped based on expected
  recovery rate or unit yield.
 Segment Treatment – Operations management applies the
  optimal treatment for each value segment.
 Remain in compliance with clients’ work standards.
 Examples of Sub-Groups in a
    Segmentation Model:

– High Value

– Medium High Value

– Medium Low Value

– Low Value
          Scrubbing, Scoring &
          Segmentation Value
•   Integrated into new business load process
•   Credit Bureau Scores & Attributes
•   Bankruptcy and Deceased Accounts
•   Provides Detailed Skip Information
•   Cell Phone Identification
    – Preparing for global cell phone purge
    – Currently, flagging and usage determined by client
                          IVR
• Technology that allows a computer to detect voice and
  keypad inputs.
• Objective – Increase borrower reach. Campaigns and
  message content are centrally controlled and consistent
  to ensure regulatory compliance.
• Current Usage – IVR technology used as both an auto-
  message platform, as well as a method to drive
  authenticated right party contacts to collectors, enabling
  our staff to be more efficient and productive.
        Productivity Measures
• Employee Metrics
 – Objective – Improve financial performance by
   tracking agent level productivity, improving
   accountability and identifying areas of
   opportunities for re-training. Initial focus on
   efficiency (occupancy) and effectiveness
   (dollars collected).
       Productivity Measures
• Key Performance Indicator (KPI) Reports
  – Objective - The KPI report allows monthly
    performance tracking by client and segment.
     • Operations Managers can make treatment
       adjustments by each segment as needed.
     • Analysts can monitor the performance of
       segmentation models and adjust / redevelop as
       needed.
  ADDITIONAL
PANEL REMARKS
        BACK TO THE BASICS

CHANGES IN TODAY’S BUSINESS OFFICE:
•   Failing Economy
•   Freeze in the Credit Market
•   Decrease in Budget/Resources
•   Decrease in Staff
•   Restricting Regulations
       BACK TO THE BASICS

THE EFFECTS OF THESE CHANGES:
• Increase in AR bad debt
• Increase in Bankruptcies
• Less Consolidations
  – Increase in Cohort Default Rates
  – Less Perkins to loan out
• More to do, less to do it with
          BACK TO THE BASICS
STRATEGIES:
•   Working Smarter Instead of Harder
     – Utilizing Technology
     – Working closer to FA Office
         • FAFSA
         • Forecasting
     – Clear and Concise Disclosures
         • Payment Agreements
         • Financial Agreements
•   Continue the Consolidation Pipeline-William D. Ford
•   Look at rehabilitations
     – Pro: Allows borrowers to continue demonstrating ability to pay
     – Con: Borrower’s expectation in getting out of default
         BACK TO THE BASICS
STRATEGIES CONTINUED:
• Cash Collections
         • Is payment in full gone
         • Loss of home equity loans and open line of credit
         • Flexible payment plans due to current economic conditions
• Utilizing 3rd Party Servicers More
   – Send accounts out in a more timely manner
              – More Resources
              – Experts in Negotiating
              – Consolidation Gurus
              – Unique Skip Tracing Techniques/Skills
              – Credit Bureau Reporting
   – Utilize your billing servicers for AR Collections and other
       institutional funds
     BACK TO THE BASICS
STRATEGY CONSIDERATIONS:
• Internal collections
   – More Due Diligence
   – More Follow Up On Broken Promises
   – More payment arrangements
   – Reporting to CB
   – Internal skip tracing
         BACK TO THE BASICS
STRATEGY CONSIDERATIONS:
•   Collection Agencies
     – Using more than one agency
     – How to find the right agency for your institution
         • Higher Education Experience
         • Bonding/Insurance
         • Licensing
         • Audits
         • Customer Service
         • Technology
         • Education
         • Recovery
     – RFPS
     – Pricing
     – Tracking Stats
     BACK TO THE BASICS

COLLECTIONS AGENCIES –DOING MORE WITH LESS:

• Competition and Set Pricing has forced
  agencies to develop techniques that provide
  better results using less time, manpower and
  expenses.
• We are able to handle more business with
  less employees due to the technology
  changes in our industry, we are able to do
  this without jeopardizing results.
  ADDITIONAL
PANEL REMARKS
 Incentives & Cultural Changes
• Today’s Collectors vs. Yesterday’s
• It seems as the old saying goes, what goes
  around comes around!
• With the changes in our industry over the last
  three years collectors of Today are using the
  collectors of Yesterday’s techniques:
• Payer Trays – Financial Statements
• Large Down Payments – Monthly Payments
• More Family Involvement
 Incentives & Cultural Changes
• Alignment of goals:
  – Understanding Clients Goals and Objectives
    and how to incent Collectors to achieve the
    Goals.
     1.   Collector Incentive Plan.
     2.   Collection Manager Incentive Plan.
     3.   Non-Collector and Non-Collector Incentive Plan.
     4.   Senior Manager Incentive Plan.
 Incentives & Cultural Changes
• Rewarding without Pay
  – Physical Environment – Awareness of a job
    well done – Collector Recognition.
  – Total Quality Management – Team Work
  – Company Newsletter Recognitions
  – Informing Clients of Performance
  – Daily, Weekly, Monthly Contests
  – Weekly Lunches or Pot Lucks
  – Use your imagination!
 Incentives & Cultural Changes
• Compensation and Motivation:
  – WIIFM or WIIFThem
  – “Pay Attention to the people that have the
    greatest impact on productivity.” Following-up
    on results is the #1 motivator of people!
  – Share bonuses, incentivize reaching goals.
    Money is the best motivator!
  – Less hourly wages, more commission!
  – Employees are cash driven!
    They also like to be rewarded with Paid Time
    OFF!
  Incentives & Cultural Changes
• Hiring Practices – with all of the lay–offs our pool of
  applicants has changed. More Educated.

• Security and Background Checks – very costly but a
  must, not only to protect customers but also fellow
  employees!

• Contract Specific Training – more demanding

• Scope of Business – understanding what the clients
  want, we are seeing different business lines, A/R –
  Private Loans – State Loan Programs etc.
 Incentives & Cultural Changes
• Collection Techniques – Collection Systems

• Calling Strategies ( Dialers, Texting, E-mails,)

• Scoring Models

• Skip Tracing Techniques – Facebook –
  MySpace – just a few examples.
  ADDITIONAL
PANEL REMARKS
QUESTIONS & ANSWERS


   AUDIENCE IDEAS
          &
    PARTICIPATION
EMAIL CONTACT INFORMATION

• JOHN ADINNINO
               john.adonnino@ncogroup.com
• KAREN REDDICK
               kreddick@ncmstl.com
• BILL CANTALOPE
               bcantalope@ersinc.com
• CARL PERRY
               cperry@progressivefinancial.com

THANK YOU FOR YOUR ATTENTION!