Collection Best Practices
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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 email@example.com • KAREN REDDICK firstname.lastname@example.org • BILL CANTALOPE email@example.com • CARL PERRY firstname.lastname@example.org THANK YOU FOR YOUR ATTENTION!