For collection agencies and ARM companies, tax season may feel like the real Christmastime.
Tax season is in full force. Having a tax season strategy in place allows agencies to collect more money. Of the significant number of consumers who are expecting a tax refund this year, nearly a third plan to spend their refund on paying down debt.
Having said that, mid-February through May is the most productive time of the year for the debt collection industry.
Begin with the End in Mind.
To launch a successful tax season debt collection strategy, consider the economic conditions surrounding consumers. Consider your staffing needs, training time, compliance concerns, data security and technology limitations.
When you launch a tax season strategy, consider how you will measure your success. Utilize reporting tools to zero in on KPIs and seasonal trends.
Using some of these metrics will help you identify bottlenecks in your agency. Metrics including right party contact rate, percentage of calls resulting in a promise to pay, recovery rate per client, average balance referred, days payment outstanding, and average payment per collector.
What’s your approach?
Using the data collected to develop and refine strategies lays the groundwork for building targeted settlement offers and campaigns.
As strategies are in place, coordinate communication with clients and staff. Do this to ensure the consumer messaging is consistent, positive, and convincing will help ensure success.
Do You Staff Up?
As your company “staffs up” in preparation for tax season, keep in mind that the current low employment percentages may translate into difficulty with hiring and training collectors early enough. Be prepared on the hiring process early to launch an effective in-house tax season debt collection strategy.
DAKCS can help with the training aspect for new employees. The Beyond ARM system is easy to learn and user-friendly. Collectors can be up and running in as little as 2 hours.
Hone your Tactics
Creating tactics that support your strategies include:
- Automation of contact campaigns
- Workflow automation and design
- Monitor practices and actions
- Reporting and auditing of each campaign
Maximize your return during this time of year by using:
Targeted Settlement Discounts
Targeting the most likely to pay and offering them a discount if they pay in full. As outlined in a PDCflow article about a tax season strategy that works:
Settlement letters offering discounts between nine months and three years old were sent. Accounts with the highest recovery scores of 540 and above were targeted. Offers were mailed for a 30 percent to 50 percent reduction of the original amount due.”
Utilize automation and select accounts that would qualify for tax settlements, thus creating another strategy. Offer a Tax Voucher or a coupon with an expiration date in a letter targeting tax season.
The ideas from both strategies are similar; however as you can see the presentation is different. By using a voucher, this gives the consumer a physical reminder that can be placed on the refrigerator with a magnet.
A tax voucher could look something like this:
Tax time is an opportunity to reach consumers ready to pay.
As you begin with the end in mind, develop effective strategies, prepare your staff, and hone your tactics, you’re ready to make the most of the tax season. Learn more about effective tax season strategies for debt collection agencies by checking out our dakcs.com site.
Call us today at 1.800.873.2527. Our team is ready to get started helping you build successful strategies to improve and grow your business.
We are the #DAKCSdifference in debt collection software.