The debt collection industry is very complicated and comes with a set of unique challenges. That’s why most businesses prefer to work with agencies that provide a robust solution to those challenges and streamline the collection process.
Debt collection is a sensitive topic and collection agencies need to navigate unique challenges every year. The best debt collection agency tackle those challenges head-on and overcome them with their distinctive approach. Let’s address some of the debt collection obstacles in 2023 and figure out how to overcome them.
1. Unreliable Contact Information
Debt collection agencies have a hard time finding accurate contact information for debtors. A 2021 TransUnion survey revealed that debt collection agencies reach just around 4 percent of debtors on their first attempt. 1 out of every 5 debtors needs to be contacted several times through different methods. That translates to wasted resources and lowers the success rate of debt recoveries.
Most people are doubtful about sharing their contact information in the digital age. Debtors may move to a different address. They can switch to a different number or even lack proper communication channels, also. That’s why business debt collection agencies or any commercial agency need to adopt new solutions to cut down on the hours wasted contacting debtors.
Take skip tracing as one of the key solutions, by which we can process various locations’ and whereabouts using various sources of information. There are various ways that skip tracing can be helpful to debt collectors. Skip tracing is helpful to your debtors in such a way that they can get all the debt and credit collection details, such as contact number, email addresses, and their social media handles as well. Identifying a person through skip tracing also helps to remove the wrong ones.
Digital communication is used for online platforms and channels to communicate with debtors. Your both debt collectors and debtors are more convenient, flexible and efficient. Digital platform can be used for communication for the debt collectors to send pop ups, reminders, invoices, options for payment, and any important information. It can be helpful to their debtors via email, text messages, chatbots, or mobile apps.
Debtors can use digital communication to respond to debt collectors, quickly. They can negotiate payment plans, make payments, or request more information at their own pace and comfort. Skip tracing and digital communication help business debt collection agencies improve their chances of reaching out to their debtors and recovering their major debts.
These can not only help them to reduce the overall costing but also less time-consuming and, thus it can increase your customer satisfaction.
Some collection agencies are using technology to overcome this challenge. They use customized software and AI to update debtors’ contact information. They craft an advanced database that can be accessed with a click and can be used to send texts and e-mails directly through the software. As a Texas business, you need to hire a technology-oriented debt collection service in Houston to recover your commercial debt swiftly. Nelson, Cooper & Ortiz, LLC is one of the best commercial collection agency firms that offers such services.
2. Regulatory Changes
Finances and anything related to that industry are strictly regulated. That’s why the debt collection industry is heavily scrutinized and faces regulatory changes that affect collection practices. Keeping up with new and complex laws and aligning your approach to legal compliance costs a lot of resources.
A reputable agency that offers professional debt recovery services needs to consult legal experts or employ them in their firm to comply with evolving regulations. Apart from that, they also need to invest in employee training programs to update their agents and prepare them for a big change.
3. Balancing Business-Customer Relationships
As debt collection agencies recover the debt for businesses, the wrong approach may strain the relationship between them. You don’t want to lose a valuable customer or have them paint you in a bad light to their peers. That’s why a debt collection agency must value your customers as much as you do and recover your debt with a gentle yet effective approach.
They should have a team of experts with several years of experience in dealing with all kinds of customers and understand every debtor’s unique situation. Professional debt collectors don’t harass the valuable customers of your business. They are innovative and try to shorten debt collection time as much as possible.
4. Economic Challenges
Economic challenges are very unpredictable and hit everyone including debtors and collection agencies like a brick wall. Global pandemics, wars, natural disasters, and other such events lead to the loss of property, jobs, and businesses that affect the entire world. Even the most profitable businesses may be forced to shut down which leads to a spike in unpaid debts.
Businesses need to cut down on expenses and run out of cash for paying their debt. That’s why credit collection agencies need to be proactive and identify vulnerable customers before they become delinquent accounts. Those accounts require extra attention and require a personalized strategy for successful recovery. Collection agencies that use machine learning and AI would have an edge over their peers if they can create a database with accurate debtor information.
5. Overused Resources
The resources of a debt collection agency get stretched to the limit throughout the debt collection process. This can be easily solved with enhanced IT capacity and expanded tech integration. Agencies should offer customers several channels of communication and try to automate debt payments as much as possible. Offer online payment options instead of mailed checks and add chatbots to provide 24/7 assistance.
Commercial debt collection is a complex affair. As a business, you must hire a debt collection agency that can overcome these obstacles and provide effective solutions for collecting financial liabilities. It’s also important to hire an agency that stays complaints with all the laws and makes debt collection a positive experience for your customers