Next generation collections systems
The following article is an extract from the Decision Analytics blog posted by the Director of Collections Solutions in the US.
In today’s collections environment, the challenges of meeting an organisation’s financial objectives are more difficult than ever. Case volumes are higher, accounts are more difficult to collect and changing customer behaviour is rendering existing business models less effective.
When responding to recent events, it is not uncommon for organisations to take what may seem to be the easiest path to success - simply hiring more staff. Perhaps in the short-term there may appear to be cash flow improvements, but in most cases this is not the most effective way to cope with long-term business needs. As incremental staff is added to compensate for additional workloads, there is a point of diminishing return on investment and that point can be difficult to define until after the expenditures have been made.
So, where should a collections department consider investing to improve financial results? The best option will probably not be the obvious choice and the mere thought can make the most seasoned collections professionals shudder...replace the core collections system with modern technology.
The collections system software industry is on the brink of a technology evolution to modern, next-generation offerings. Legacy systems are typically inflexible and do not allow for an effective change management program. This handicap leaves collections departments unable to keep up with rapidly changing business objectives that are a critical requirement in surviving through these tough economic times.
Today’s collections managers face the need to reduce operational costs while improving other objectives such as reducing losses, improving cash flow and promoting customer satisfaction (particularly with customers that pose a greater lifetime profit opportunity). The next generation collections software squarely addresses these business problems and provides significant improvement over legacy systems.
Not only is this modern technology now available, but, the return on investment models are extremely compelling and have been proven in markets where successful implementations have already occurred.
When migrating to modern technology, it is very common that organisations experience at least a 20 percent gain in productivity improvement initially. This equates to the possibility of 20 fewer headcount in a team of 100 to handle the same workload. Alternatively, the existing team could handle 20 percent more accounts with approximately the same average results per account. Assuming a fully loaded cost of €50,000 a year per headcount, a 20 percent productivity boost in this example would roughly translate to a million Euros annually in financial benefit. When considering the additional benefit of reduced cost of training, this number will be even higher.
Mike Sutton
Decision Analytics North America
+1 678 731 1149
mike.sutton@experian.com
Further information on the subject of ‘Next generation collections systems’ can be found on Mike Sutton’s blog which featured a four part serialisation on this topic. Mike is primarily responsible for packaging and promoting collections products and services based on market trends and client needs, Mike is therefore ideally placed to offer constructive comments and analysis on up to date issues. The Decision Analytics blog pages are regularly updated and feature a variety of detailed information across a broad range of issues.
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