Improve Bank Debt Collection Success Using These Strategies
Bank debt recovery is growing, mostly because of a poor economy affecting both consumers and markets around the world
. Banks and credit unions are adding new techniques and strategies to improve bank debt collection.
Banks are witnessing continually growing loan and credit card defaults, as well as checking account charge offs, due to years of steady rising consumer debt, as consumers face trying to just pay for the necessities. Because of this, banking and credit unions are incorporating new strategies to help improve debt recovery success.
Below are a few recommended bank debt recovery tips, which will definitely help increase your debt collection success.
Offer flexible plans for customers experiencing financial hardship.
. Design "hardship" programs for borrowers that are late on their loan payments.
. Extend or lower payments, interest rates, or lower fees when you anticipate customer payment problems.
Create communications channels where customers can openly discuss their issues. By proactively reaching customers early, you can prevent larger problems later.
In addition to your present internal debt collection processes, these suggestions are designed to "flag" wouldbe problems much sooner, and prevent them from becoming much larger problems later on.
When To Outsource Bank Debt Recovery to Collection Agencies
It is absolutely imperative for banks and credit unions with growing debt collection problems to quickly get rid of problem delinquent accounts, and turn them over to a collection agency.
Employing some of the tips suggested earlier, you'll be better equipped to identify, early on, the more difficult accounts, and distinquish them from the customers that you can work with internally through payment arrangements.
These problem accounts need to be identified early in the process, and turned over to a third party collection agency. Failing to do so, not only decreases your likelihood of getting paid on them at all, it costs you far more in time, resources, etc.
Some collection agencies even offer programs specifically designed to restore negative accounts, and save the banking relationship with the customer before the account is charged off and closed. Research even shows customer retention rates of 70% and better, in addition to restoring negative account balances when they're contacted pre-charge off.
The crucial element is reaching these customers before the account is charged off, not afterwards.Besides offering the customer incentives for restoring their former negative account status, its also proven that after a past due account is charged off and closed, these customers often seek bank accounts with other institutions.
Once this occurs, there's less incentive for that customer to bring current their past due account.
Improve Bank Debt Collection Success Using These Strategies
By: David Montana
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