Benefits Of Automating Your In-House Debt Collection Process

Behind the scenes

By Dean Kaplan+

There are many benefits to automating your in-house debt collection process. While it may appear daunting at first, one of the most significant and immediate benefits to automation is a shift away from the clerical tasks associated with collections and towards the most important value-added time spent working with customers.

Once your company makes the decision to automate, a reasonable timetable for implementing a new package in a small company is two to three months for installation, with significant results evident one to two months later, and returns on investment within one year. With this positive ROI expectation, this benefit alone is enough for most companies to seriously consider the option, unless cash flow is just too tight to make the investment.

A structured approach to automation is necessary to help minimize the pain of significantly upgrading the company’s collection process. The two major phases of automating the debt collection process are package selection followed by implementation.

The underlying reason for automating the collection process is financial, including improved debt collector productivity and enhanced customer service. Both of these influence a company’s bottom line. A more productive collector collects more from slow or no paying customers. Better customer service can lead to more sales in the future.

The time spent by debt collectors on clerical tasks in one of the biggest factors causing decreased collector productivity. Manual tasks performed routinely by collectors include: reviewing aging reports to identify customers who need to be contacted, prioritizing customer contacts, putting together daily to-do lists, researching and collecting all necessary documentation prior to making a contact, attempting telephone contacts, and transmitting requested documents to debtors. All of these manual tasks are non-value added activities and put downward pressure on a collector’s efficiency and productivity.

Collection automation eliminates many of these clerical tasks or at a minimum simplifies the tasks, enabling the collector to focus more energy on phone calls and follow-up activities. It is not unusual for a collector’s productivity to double, triple, or even quadruple after collection automation is in place.

The way collectors collect can vary widely from one individual to another, especially if collector training is spotty or inconsistent. Automation enables a company to implement a “best practice” approach, thereby reducing many individual variations. One of the most important benefits of automation programs is the availability of data and information within the system. Because this data is at everyone’s fingertips, they can be more responsive to customers during their phone contacts. Management also has the opportunity to track the performance of collectors and further adjust automation to continually improve the efficiency of the collection process.

An accurate, centralized accounts receivable data base will improve customer satisfaction by reducing the number of people customers must contact to resolve billing and payment issues. The rapid and consistent availability of supporting documentation will make it much easier for customers to deal with the company.

The benefits associated with collection automation are far reaching. However, the selection of the right program for your company is of paramount importance. Be careful when you start to research the programs out there. A clear understanding of your company’s current debt collection process as well as the key features and functions desired in the automated solution will result in a successful automation. Inadequate definition can result in a poor installation that fails to meet the desired financial and performance objectives. Do your homework and don’t rush the process. In the end, when the system is in place and your in-house debt collection process is humming along like a well-tuned machine, you will be glad you automated.

The Kaplan Group is a boutique collection agency specializing in large (over $10,000) debt collections due from businesses. Founded in 1991, the company has a stellar reputation (A+ rating with the Better Business Bureau) and is recognized as one of the leading collection agencies for results on large and complex matters.

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