Tuesday, July 16, 2024

Choosing a Debt Collections Agency for Your Business

Are you looking to hire a debt collection agency for your bank? Although repayment issues have always been an issue, the problem has heightened since COVID-19. If this is something your company is dealing with, you may be wondering what your options are for collections.

There are two main methods of debt collection agencies: data-driven and traditional. Of course, you’ll want to choose the most effective solution for debt recovery. But how do you know which one that is? Let’s take a closer look at the two options. 

Data-Driven Debt Collection vs. Traditional Agencies

The data-driven debt collection platform uses data analytics and artificial intelligence (AI) technology to assist in debt repayments. It uses customer insights to offer more solutions for debt collection. These include personalized text messages, WhatsApp messages, and emails. Customers generally don’t need to speak with a representative unless they choose to. 

Data-driven debt collection agencies also track customer trends to help promote repayment in the future. For example, if a customer opens their text message and repays their debt in the afternoon, there will be a focus on sending future debt collection texts in the afternoon. Analytics will also help determine which outlet is most effective. If a customer opens their texts but ignores their emails, future correspondences will be conducted primarily through text messages.

The tone used in messages sent from data-driven debt collection agencies is often more empathetic. The companies generally analyze different kinds of empathic tones to see what encourages customers to repay their debt. 

Traditional debt collection methods simply consist of an agent continuously calling an individual to collect the unpaid debts. After enough time has passed without the customer paying, the agent will generally start sending letters in the mail, threatening lawsuits if the debts continue to go unpaid. 

Which Debt Collection Solution Is More Effective? 

Wondering which debt collection method is the most effective? Data-driven debt collection is, overwhelmingly, the more effective solution. When the customer receives a message, they will often make a payment. This method of debt collection offers flexibility and ease of payment. All customers have to do is click a link to repay their debt.

The long-term effectiveness of machine learning and AI in debt collections is another one of the main benefits. The data obtained can help ensure that customers who default on their payments continue to repay them over time. This collected data also helps the agency see what encourages a bigger population to repay their debt.

With traditional debt collection, the customer has to speak with a debt collector. They will also repeatedly call, which can be very frustrating. Some customers might even find it intimidating or stressful to speak with a representative. Customers may also ignore phone calls from numbers they don’t recognize, which can make the debt collection process even more challenging.

In the end, no one is ever happy with the traditional method of debt collection. The customer will generally feel frustrated and harassed, while the collection agency’s attempts to receive payment will generally be unsuccessful. 

How Much More Effective Are Data-Driven Debt Collections?

If you’re a numbers person, these stats might help make your decision easier from a lender’s point of a view. Some data-driven debt collection agencies have found that there’s a 90% debt recovery rate, making this method 120 times more successful than traditional debt collection agencies.

If you’re looking for the best debt recollection solution for your business, consider opting for a data-driven debt collection agency. Not only does it help improve the overall customer experience, but debts are more likely to be successfully collected. 


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