Expensive and Outdated Collection Methods Hampering Industry Rebound
A recent survey of 400 US based collections and financial services executives by Lodestar Research on behalf of Varolii in May of 2010 shows that collection companies are finding it increasingly difficult to collect. They are faced with new problems because consumers cannot or do not want to pay, and the cost of making collections has steadily increased. The studies also revealed that collectors could reduce costs and perhaps persuade reluctant consumers to pay by using debt management software and technology.
The study goes on to explain that it is more than just the economy that continues to impede collections efforts. The fact that most consumers just don’t have the ability to pay their debts really impacts collections, and even when they can pay, they frequently won’t. The other major factor in debt collection problems is that the cost of collecting debts continues to increase because of all the new legislation, and debt collectors who are using antiquated methods can’t afford the cost of business.
According to the study, a large percentage of debt collection agencies have trouble dealing with the larger volumes of delinquent accounts, and many of them are using antiquated methods such as direct mail, additional staff, and continually dialing land line numbers. With automated debt management software, collection companies can conform more easily to increased regulations, leave personalized automated voice, text and email messages, scrub cell phones, prioritize accounts, record calls, automate dialing, provide incentives and addition methods of making payments and more, utilizing efficiencies and saving companies money without increasing staff.
The study also points out that first-time defaulters have increased due to the economy, and debt collection companies need ways to differentiate between them and chronic debtors so that they can treat them differently during the collection process, a method that has proven to be much more effective.
Debt management software is continually updated to conform to new regulations, and can save collection agencies because rather than adding the expense of additional staff, they can use proven new techniques that provide a better experience for debtors, resulting in a higher percentage of debts collected.
Bio: Sue M. is a freelance writer working with DAKCS Software to educate debt collection agencies about the benefits of using debt management software.
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