Making the right choice in collections - how do you manage your collections operation?
The global recession has taken hold more quickly than anyone could have predicted. A universal theme for financial organisations is concern over increasing indebtedness and the need to manage cash flow.
Collections, traditionally an area of low investment, is now under scrutiny and collections managers have now been given the budget and mandate to improve the collections process and to do it quickly.
Organisations need to look closely at all the options available to them and carefully scrutinise a number of key criteria to ensure the right choice of collections system is made. Software selection can be a long, drawn-out process and as well as the standard price / feature comparison the evaluation of criteria including technology platform, system architecture, service and support and even corporate vision has become an integral part of the selection process.
However, priority must be placed on those areas that will count the most. Four key attributes will have the greatest impact on the organisation’s profitability.
- Depth of and breadth of system functionality
What can the system offer? Can it segment and prioritise debtors in enough detail to create highly targeted collections strategies that will be the most effective? How well does it handle account allocations to third party agencies? How does it manage the collectors and case management for efficient workload allocation? Can it manage litigation and debt recovery? What reporting can it do – for both operational and strategic monitoring?
- System flexibility
How quickly can the collections team make changes to the system, strategies and processes? Can the organisation achieve compliance with new regulations and best practice quickly enough? Are the strategies configurable by the risk team or do you need IT involvement?
- Speed of deployment
How long will it take to implement the collections system? How long before the organisation can recognise the benefits?
- Total cost of ownership
Any system capability has to be translated into return on investment. Every organisation needs to not only consider the cost of delivery and the improvement in collections and recoveries costs but also the harder to quantify benefits, such as the enhanced efficiency gained through having the ability to continually improve the collections operation over time.
With a careful consideration of these criteria in a robust evaluation process, organisations can clearly identify the benefits and limitations of the different options available.
By rigorously evaluating all the alternatives, organisations are likely to find that implementing a specialised collections solution with open interfaces and industry specific processes will curtail losses and accelerate cash flow much faster than its ERP or CRM collection module equivalent - at a fraction of the risk and with a significantly lower overall cost of ownership. Dedicated collections systems, designed to handle the entire customer debt lifecycle, can provide a lower cost of delivery, a lower cost to collect and faster, more targeted collections activity to reduce DSO and improve roll rates.
To read more about evaluating collections systems and the benefits of a dedicated collections system download the Experian briefing paper.
Dan Scholey
Global Head of Debt Management Solutions
Decision Analytics
Experian
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