So what about debt collection software? The debt collection procedure comprises a large number of participants, a great deal of communication, and a ton of data points. These factors make it a source of friction as well. Your collection findings may be being held down by an overcrowded Excel spreadsheet that you use to manage them, or they may be due to a lack of a well-coordinated approach.
There definitely must be a better method, as you have likely suspected at some point. One of your wisest purchases will be in specialised collecting software. And there are a number of warning signs that indicate you urgently need it.
1. You don’t have a definitive strategy in place
Simply put, something needs to happen if your accounts are not producing money and too many of your clients are falling behind on their payments. Companies will need to enhance their collection procedures if they want to increase income from current customers.
They can quickly test numerous techniques using the capabilities of debt collection software before settling on one that serves as the ideal middle ground option. One of the main advantages of any centralised software suite is the capacity to test, evaluate, and improve a plan. It gives users the ability to quickly modify a system while it’s running without causing too much disruption. The rest of that system will be affected by those changes as well.
2. Without debt collection software, data is badly and sadly organised
Due to the technology at the time, it was rather typical for all collection tactics to be built around a number of complex and overly complicated Excel spreadsheets. However, you are not getting the power you need when you use a basic Excel spreadsheet to manage the vital data used by the average business.
Excel is a great tool, but it wasn’t made to handle the intricacy of debt collection. Excel is notoriously prone to mistakes when it is overloaded, whether by the quantity of users or the complexity of the business. You lose your ability to rapidly think and act when you are continually switching between 99 tabs.
Not to mention Excel stumbling to keep your debt portfolio under control. A modern collections department must use centralised and specialised technologies to manage a broad portfolio of debts. With the aid of collections software, it is simple to keep all relevant information—documents, data, and insights—in one location, streamlining the process and helping you spot credit risk right away.
3. You’re losing track of contact records
This is definitely one if the signs your business needs debt collection software. It can be simple to forget to update client information and lose sight of them without a solid system in place. Billing information (names, addresses, phone numbers, email addresses, etc.) must be kept current in order for a collections operation to go properly.
People are also more likely to move more frequently, which implies that customer information is likely to become out of date faster given that the share of renters alone has significantly increased in the previous 20 years.
Debt collection software launches periodic checks to make sure that customer information is accurate and that all barriers to repayment are being removed. Debt collection software is a great method to get to know your clients and their changing habits with more clarity and efficiency. In the end, the more you know about your consumers, the more successful your collections will be.
4. Customer risk scoring is inconsistent
At every level of the collections cycle, sophisticated debt collection software enables the adoption of more simplified procedures. A company’s software will be more effective the more knowledge and insight it can gather from its clients.
Customer risk scoring is a crucial component of that activity, and collections software greatly simplifies the process of assigning scores based on bill payment data so that points can be added or subtracted when collections lag. These results can be used to reevaluate the likelihood of delinquency and maintain client relationships.
5. Your strategies are not customer-centric
Customer-centered practices must be implemented at every level of the collections cycle because customers are the lifeblood of any organization. This will help retain current customers and attract new ones. This means using social media to stay in touch with your clients constantly and making sure you address their concerns before they turn into complaints.
Without the proper system in place, keeping track of changing risk scores, personal information, and statuses can be difficult. Data, analytics, and user-friendly collections software may be the key to helping businesses maintain client relationships.
6. Customers accuse collectors of being unsympathetic
Despite the rise of more regulated collections agencies, write-offs and outstanding debts are on the rise. This creates a strained relationship between supplier and consumer and puts the former in a difficult position where if it acts badly, it could push the customer into the open arms of a competitor.
To mitigate this risk, utilising debt collections software and self-service solutions, where customers are offered more agency over their own accounts, will help make your company seem more transparent and more sympathetic.
7. Digital transformation is an important part of your growth strategy
Every modern business should include digital transformation in its growth plan. But if you’re not willing to put in the effort, it won’t necessarily come naturally. Your current system is obsolete and inflexible if you can’t rapidly and easily make changes to its settings without involving IT or the software supplier.
Debt collection software solutions offer greater flexibility in adjusting to changes because modifications can be made quickly and on the fly. Collections are a key tenet of any business, and digital transformation is about transformation from the top down.
8. You don’t know how effective your current collections strategy is.
It is important to test how valuable it is to keep an eye on your tactics and customer behavior. Testing doesn’t have to be expensive and time-consuming. A/B testing is made simple by excellent debt collection tools, allowing for ongoing experimentation. The answers to these interminable questions should guide your strategy both now and in the future.
A basic component of functionality that is essential to enhancing your internal debt collection efforts is testing, measuring, and refining. An investment in debt software should be on your radar if you are unsure of what strategies work and which ones don’t.
9. Consider a self-service option
The procedure of collecting debts should not be antagonistic since it presents a customer service issue. Customers need your assistance the most when they are having difficulties, so be there for them. Nobody desires to have debt. Additionally, relying on an antiquated collecting model frequently deprives customers of their authority.
With the use of self-service portals, collections software flips this logic, making the process of recovering debt collaborative. Customers can take charge when using a self-service tool since they can make arrangements at their own pace and in the manner of their choice. All a customer needs is a chance to solve the problem on their own; there is no need to pursue or pressure them.
10. You want to integrate artificial intelligence into your collections system
With applications ranging from fraud detection to customer care chatbots like Erica from Bank of America, artificial intelligence (AI) has already had a significant impact on the commercial and finance sectors. It’s a thrilling period, and collections teams have a significant chance as well.
In order to help agents make wiser judgments, collections software with AI and machine learning components can sift through masses of data, identifying trends.