In today’s fast-paced business environment, collecting debt efficiently is critical for maintaining a healthy cash flow. Nevertheless, given the current state of the economy, it can be a difficult undertaking. At JurisTech, we recognise the difficulties companies encounter in pursuing unpaid debts. That is why we have put together this comprehensive guide to assist you in optimising your debt collection efforts and achieving better results.
The Rise in Adoption of Debt Collection Software
The size of the global debt collection software market was estimated at US$ 4.0 billion in 2022 and is projected to grow at a compound annual growth rate (CAGR) of 10.91% from 2023 to 2028, to reach US$ 7.4 billion. The financial institution sector led the global market in 2021, and this trend is anticipated to hold true for the duration of the forecast. The demand for debt collection software is expected to grow as debt collectors face increased pressure to reduce costs while enhancing operations and increasing revenue.
Understanding the Debt Collection Process
Before diving into strategies for improvement, it’s crucial to have a clear understanding of the debt collection process. This involves a series of steps, beginning with the initial contact with the debtor and ending with the resolution of the outstanding balance. Familiarising yourself with each stage will provide a solid foundation for implementing the strategies outlined in this guide.
Early-Stage Collections (Less Than 30 Days Past Due):
During this stage, the creditor typically sends phone and mail notices to the debtor informing them of the outstanding payment. If applicable, services may be suspended and credit reporting bureaus notified. The debtor may also receive communication directly from the original creditor regarding the overdue payment.
Mid-Stage Collections (30 to 60 Days Past Due):
At this point, the original creditor may still be actively involved in debt recovery efforts. The debtor may receive additional communication from the original creditor or a third-party collection agency. It is important to note that the debtor retains the right to contest the debt and request verification.
Late-Stage Collections (60 to 90 Days Past Due and Beyond):
The original creditor may decide to write off the debt and sell it to an outside collection agency, often for a fraction of the original balance. As a result, the collection agency makes every effort to recover as much of the debt as possible, using a variety of communication methods to reach out to the debtor.
Advanced Debt Collection Optimisation Strategies
Now that we have covered the fundamentals, let us dive into advanced debt collection strategies that can significantly improve your results.
An Overview of the 4 Strategies to Optimise Your Debt Collection Strategy
1. Leveraging Data and Analytics
Data-driven decision-making is an effective debt collection tool. It enables you to focus your efforts more effectively, increasing the likelihood of successful recoveries.
Predictive Modelling for Debt Recovery
Predictive modelling is the use of historical data and statistical algorithms to forecast future outcomes. Predictive modelling in debt collection can help identify which accounts are more likely to result in successful recoveries. By focusing your efforts on high-probability accounts, you can maximise your resources and increase your overall collection rate.
Monitoring Key Performance Indicators (KPIs)
Tracking relevant KPIs provides useful information about the effectiveness of your debt collection efforts. Metrics like collection rates, account ageing, and recovery rates can help you identify problem areas. Analysing KPIs on a regular basis allows for continuous improvement of your collection strategies.
2. Implementing a Segmented Approach
Not all debts are equal, and treating them as such can be detrimental. Using a segmented approach allows you to tailor your collection strategies to each debtor’s unique characteristics.
Prioritising High-Value Accounts
Determine high-value accounts that have a significant impact on the financial health of your company. These accounts may represent large outstanding balances or have strategic importance. Allocate additional resources and attention to ensure that they are resolved on time.
Tailoring Strategies for Different Customer Profiles
Recognise that different customers have different financial capabilities and communication preferences. Some people respond better to negotiation, while others benefit from structured instalment plans. You can improve your chances of a successful debt recovery by being aware of and accommodating these differences.
3. Offering Flexible Payment Solutions
Offering flexible payment options can significantly increase the likelihood of debt recovery. It exhibits empathy for debtors’ financial circumstances and a readiness to work with them.
Offering a settlement could be a useful strategy for debtors who are struggling financially. Accepting a partial payment as a final resolution of the debt constitutes a settlement. Both parties stand to gain from this, as it lets the debtor lessen their financial burden while guaranteeing your business gets paid a portion of the outstanding balance.
When negotiating settlements, it is critical to maintain transparency and professionalism throughout the process. Outline the settlement terms in detail, including the agreed-upon amount and payment schedule. To avoid future misunderstandings, document the agreement in writing.
Providing instalment Plans
Structured instalment plans allow debtors to make smaller, more manageable payments over time. This method is especially useful for debtors who are unable to make a lump-sum payment. Determine a payment plan that is in line with the debtor’s financial resources in collaboration with them.
Make sure the written agreement contains a clear description of the instalment plan’s terms. Specify the agreed-upon payment amounts and due dates, as well as any applicable interest or fees. Communicate with the debtor on a regular basis to ensure that the agreed-upon terms are followed.
4. Embracing Technology and Automation
Today’s digital age allows you to revolutionise your debt collection process by utilising automation and AI technology. It improves communication with debtors while streamlining operations and increasing efficiency.
Implementing Debt Collection Software
Investing in advanced debt collection software can drastically improve the efficiency of your operations. Automated reminders, integrated communication channels, and predictive analytics are among the features available on these platforms. They support your efforts to maximise collections, monitor progress, and maintain organisation.
Introducing JurisTech’s Collection Suite
Diagram of JurisTech’s Collection Suite
JurisTech’s enterprise debt collection software, Juris Collect, is an end-to-end solution that addresses all stages of debt collection. Not only that, but our debt collection software is also integrable with other solutions to achieve a better outcome.
For instance, our debt collection software can be integrated with our automated Machine Learning (autoML) and AI platform, to predict self-curing customers and behavioural scoring during the early detection stage for you to identify late payers and personalise the treatment journey to optimise your collection efforts. This allows your business to concentrate its resources on the high-value accounts mentioned above.
Regarding the early and late stages of collection, our debt collection software can be integrated with our all-in-one computer-telephony integration (CTI) software, which uses the latest technology to modernise your call processes.
Not only that, but our debt collection software enables your business to connect to an ecosystem of collection agencies and lawyers by building a collaborative platform whereby all manual handling of case distribution and commission payment is automated. By integrating with our end-to-end agency management software, we link you to debt collection agencies and automate your agency management procedures. Additionally, through integration with our legal workflow management platform, our debt collection software can put you in touch with attorneys for late-stage recovery, while providing you with real-time status updates on ongoing legal cases.
Whiz, the Heart of JurisTech’s Debt Collection Software
Whiz is the driving force behind Juris Collect, taking centre stage as it automates the complex and labour-intensive parts of the collection treatment procedure. Providing financial institutions and businesses with an intuitive interface that even non-techies can easily use, its unique feature is its capacity to streamline collection strategy management.
Whiz enables managers to evaluate and optimise various collection strategies through the use of the Champion Challenger Module, guaranteeing the adoption of the most efficient techniques. Organisations benefit from this automation in that it reduces costs and manpower burdens while simultaneously improving efficiency and inclusivity and freeing up valuable time. Whiz is essentially a key element that sets our debt collection software apart from its rivals by providing an advanced, user-friendly solution that improves and expedites the entire debt collection process.
JurisTech, Your Preferred Partner
At JurisTech, we are dedicated to providing our clients with top-notch support for their digital transformation initiatives. As a VISA-certified fintech partner, JurisTech smoothly integrates five standout products, including our acclaimed debt collection software, Juris Collect, into the VISA Fintech Partner Connect programme. This software, celebrated for its effectiveness, secured JurisTech the Best of Financial Applications award at the Asia Pacific ICT Awards (APICTA) in 2012.
Demonstrating excellence, our debt collection software not only clinched the top position in Malaysia but also progressed to the Asia-Pacific stage, winning the Merit Award in the prestigious “Best in Financial Applications” category. VISA certification highlights JurisTech’s commitment to delivering clients a swift and secure connection to technology providers globally. Immerse yourself in an enhanced banking experience with JurisTech’s outstanding solutions, ensuring seamless integration and award-winning proficiency in debt collection.
Our team can help you navigate your system and align it with your project requirements and organisational needs. It is made up of technical experts and business consultants with a wide range of industry knowledge. To make sure all of your support needs are satisfied, we also provide thorough training before, during, and after project implementation. Satisfied clients are our top priority, and we work hard to create a mutual understanding of performance expectations so that the digital transformation process is enjoyable.
Contact us today to learn more about how JurisTech’s debt collection software can improve your recovery results and streamline your operations.
JurisTech (Juris Technologies) is a leading fintech company, specialising in enterprise-class software solutions for banks, financial institutions, and telecommunications companies in Malaysia, Southeast Asia, and beyond.