Debt Collection: It’s All About the Info

Unless you collect 100 percent of charges billed at time of service (or delivery) people are going to owe you money. That’s a fact. How successful you are at getting paid is dependent on a number of factors (like the age of the debt). But without a doubt the most important thing you can do to improve the collectability of past due accounts isn’t some elusive collection strategy privy to only a few. It’s actually quite simple: get as much information as you can about the person (or company) before you provide service. 

I can’t tell you how often clients, especially the smaller sized ones, will send us placements for collection that are missing key pieces of information. I can’t stress this enough: The more information you provide, the more collectable the account will be.

To be fair, simple is not the same as easy. I understand that. Getting all the requested information will take some work. I know most of our clients already provide their customers with a form requesting the information.  But oftentimes simply asking for the information isn’t enough. It’s important to follow up to make sure the form is filled out in its entirety.

At first it might feel awkward asking customers to fill in the unanswered questions. But if you make the completion of the form a company policy it will make it less personal when you explain that everyone is required to do it.

Contrary to what you might have heard debt collection is a heavily regulated industry. There are certain pieces of information that we are required to have and others that will aid in the collection process.

Best practices include the following: 

Please note: * denotes information we are required by law to have or we cannot pursue the debt.

  • First and last name of debtor* – It might be hard to believe, but we have had clients send us accounts without the last name of the debtor. This is a must-have piece of information!
  • Address – We are required by law to send a debt validation letter on all accounts placed.  If you had an address that is no longer valid send it along as the last known address.  We can use it to skip-trace the account to find debtor’s current address.
  • Date of Birth and/or Social Security Number – Having this information makes finding the debtor’s current address easier. Also, we must have either a DOB or a SS number or we are unable to report the debt to the credit reporting companies (Experian, Equifax and Trans Union). Reporting debts to these agencies is a great tool we use to get debts paid.
  • Phone Numbers – Best practices include: home, cell and work. We use telephone calling campaigns as one of our collection tactics.  Lack of phone numbers prohibits this worthwhile tactic.
  • Amount Owed* – Many of our clients include late fees and interest on amounts owed.  Typically these fees are not collectable and should not be included in the amount owed. (There are some instances when fees can be collected, but only on certain types of debt that have a contract with the debtor such as a signed lease or signed financial agreement. Even then the fees must be expressly stated in the contract. And a copy of the signed agreement must be submitted when the account is placed.) Law requires us to be able to validate the debt. Balance forward pages do not fulfill this requirement. Accuracy is extremely important. We must be able to notify the debtor of the exact amount they owe. 
  • Last Date of Service* & Date of last Payment – There is a Statute of Limitations (statutes vary state to state) on how long we can pursue a debt for collection. To stay compliant with collection laws we need to have last date of service.
  • Employment – Name and address of employer.  This is a critical piece of information needed when considering litigation as a way to collect.
  • Spousal Information – Name/Address/phone numbers/employment information for spouse.  Sometimes (depending on the state and type of debt) the spouse of the debtor is also financially responsible for the debt.
  • Name of Creditor* – We must have both the legal name of your business as well as a DBA if it is different (or if you have more than one business) to validate the debt and when reporting to credit reporting agencies. 

I hope you found this list to be useful. Whether you partner with us or another reputable collection agency it is important to work together as a cohesive team so the money owed can be collected as effectively and efficiently as possible.

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded innorthern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 14 years.

Want Success Collecting Debt? Understand Your Audience

Have you ever watched a comedian bomb?  It’s painful to watch, right?  You squirm around in your seat counting the seconds (which seem like minutes) until their routine and the misery ends.  But here’s the thing, sometimes the reason they aren’t getting any laughs isn’t because their jokes aren’t funny. It’s because they are delivering them to the wrong audience. The right group of people could find the same comedian hilarious.

Same goes with debt collection. If you have a one-size-fits-all collection strategy you might find yourself bombing more often than not. If you want to be more successful, try to tailor your tactics and techniques to your debtor audience. Many factors need to be taken into consideration before deciding which collection practices should be used. For example, considering the age of a consumer can really make a difference. A particular collection tactic that works well for one age group may not for another.

I recently read an article by David R Glezerman in the Collector magazine that did a nice job describing why varying your approach works so well. The article’s opening line grabbed me immediately. “Understanding the unique characteristics of each consumer group can help you make stronger and more productive connections.”

Who doesn’t want that, right?

As mentioned earlier, the age (think generation) of the consumer owing the debt is a key characteristic you should consider when deciding which communication strategy will be most successful.   Over the years, we’ve written several blogs you might find useful that discuss the strengths (or weaknesses) of a particular age group such as The Lost Art of Conversation. Help is on the Way! 

Glezerman’s article presented in the ACA International publication did a nice job of compiling a lot of data in order to list the strengths and weaknesses of each generation. It explained that when you understand the characteristics of each generation you gain insight into the how and why the debt exists. And that can make a big difference on how you go about getting it paid.

Here are the highlights of the article:

Baby Boomer generation:  Their strengths include a good work ethic and strong communication skills.  Their challenges?  Poor financial literacy skills (they aren’t alone. Read why here.) and many, 59 percent of those who have kids, are still financially supporting adult children. This group still responds well to traditional communication methods like telephone calls and letters although many also use current technologies when buying and more importantly paying bills.

Average nonmortgage debt for this generation: $27,500

Generation X:  Even though this is the first generation not expected to do as well financially as their parents they are highly educated and tech savvy. But they are also cynical when it comes to creditors and exhibit a strong sense of entitlement.  Preferred communication for this generation?  Cell phones.

Average nonmortgage debt: $30,300

Millennials:  Are considered the most educated generation. They are extremely tech-savvy and well-versed in digital tools. Unfortunately, they don’t respond well to authority and want what they want now. Consequently, they spend their money as fast as they make it. Even though riddled with compliance issues their preferred communications tools are texts, emails and voicemails.

Average nonmortgage debt: $22,800

As you can see, utilizing traditional collection strategies on Gen-Xers or millennials oftentimes will not be as successful as when used on baby boomers. These tech-savvy consumers want to communicate through more up-to-date technologies.

Armed with insight into these generational differences, we, here at A. Alliance, recommend you modify your “consent to call” agreement and upgrade it to a “consent to contact” agreement. This can help mitigate compliance issues while improving your collection efforts by giving the younger generations what they want. Win-win!

Here is sample language for your “Consent to Contact” agreement

You agree, in order for us to service our account or to collect any amounts you may owe, we may contact you by telephone at any telephone number associated with your account, including wireless telephone numbers, which could result in charges to you. We may also contact you by sending text messages or e-mails, using any e-mail address you provide to us. Methods of contact may include using pre-recorded/artificial voice messages and/or use of an automatic dialing device, as applicable.

I/We have read this disclosure and agree that the Lender/Creditor may contact me/us as described above.

_____________________                     ______________

Borrower/Customer:                            Signature date:

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded in northern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 13 years.

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What’s Your One Thing?

If you’re like me you’ve probably heard the buzz around the catch-phrase: What’s your one thing? Wondering how it all got started I did a little research. Turns out it’s from a self-help business book, The One Thing: The Surprisingly Simple Truth behind Extraordinary Results by Gary Keller and Jay Papasan.

When I first heard the question I knew our one thing right away.  Since we are a collection agency you might think the answer is a no-brainer: to collect money.  And yes, you’d be right, we certainly collect a lot of money. But honestly that’s not our one thing.

Is it compliance?  Another good guess. The debt collection industry is highly regulated at both state and federal levels. Compliance is extremely important to us here at A. Alliance. We spend a lot of resources and work hard to stay abreast of all regulations and what’s happening with court rulings and proceedings. But that’s not our one thing either.

I could go on and on, but will cut to the chase.  Our one thing is caring! Everyone here at A. Alliance cares about our clients, consumers, patients, communities and each other.

We are blessed with excellent, caring leadership which binds us together as a team and keeps us focused on our goals while providing a terrific work environment marked by intelligence, compassion and kindness. Our Mission Statement includes values of honesty, balance, integrity and fair play. Our leadership team lives these values every day.

By caring about what we do, who we do it for and each other together we are committed each and every day to doing our best to collect each and every dollar owed to our clients, professionally and in a timely manner.

This is a tough industry, oftentimes it is difficult working with situations that are inherently negative. By always focusing on being helpful we all maintain a positive outlook which translates to better experiences for patients and consumers as well as outcomes for our valued clients.

One of the passages in the book that spoke to me was, “Passion for something leads to disproportionate time practicing or working at it. That time spent eventually translates to skill, and when skill improves, results improve. Better results generally lead to more enjoyment, and more passion and more time is invested. It can be a virtuous cycle all the way to extraordinary results.”

Don’t get me wrong, A. Alliance knows we must never stop trying to find creative solutions, advanced technologies, or services that create value for the Company or our clients. But if extraordinary results are what you are after first and foremost you gotta care!

A. Alliance Collection Agency, Inc. is a full service, licensed accounts receivable management and debt collection agency providing highly effective, customized one on one management and recovery solutions for our business partners.  Founded innorthern Illinois in 2005, we have been proudly improving the bottom-line on behalf of our business partners in and around Chicagoland for over 14 years.