Using Data for Debt Collection
Hi, my name is Adam Stewart, Debt Collection Expert and owner of Debt Recoveries Australia.
At the recent Australian Institute of Credit Management Conference on the Gold Coast, a session presented by Simon Bligh, CEO of Dun & Bradstreet was a real highlight for me. Simon spoke about data driven credit and debt collection strategies – his passion and knowledge in this topic was very evident.
Considering the presentation, I came to the realisation the effective use of data is the very core of the future of debt collection, after all, we understand good credit control starts with up to date, accurate data about potential clients to prevent bad debt and further in the event of bad debt arising the task of locating the delinquent customer or debtor also comes down to the availability of accurate, up to date data.
I believe as debt collectors, it’s up to us to fully leverage the data available to us (both internal and external). By doing so, we can then devise insight-driven collection strategies to maximise recovery rates, whilst minimising costs. An example, would be say, using data washing to get accurate phone numbers, then using an auto-dialler to ring those debtors – this is a classic example of how we can find accurate data from the information we already have, then devise a better way to use that data.
As debt collectors, we already have paid databases and data washing software available to gather comprehensive insights about our debtors and by analysing both internal and external data and using these insights we can develop our collection strategies effectively.
We of course, need to be flexible enough to adapt our debt collection strategies, based on what these insights are telling us. Data analytics, for instance, can be used to predict the best possible date to collect from a debtor, based on the debtor’s historical payment behaviour. Ideally, the debt collection software we use can adapt to these findings.
We should be mindful that a collections strategy which works today, may not work in the future due to a range of reasons such as changes to the collections environment or the changing strategies of our competitors. I recall when I first started my business in 2003, I was using a product called Marketing Pro (a reverse phone data-base). Marketing Pro was a very early and primitive version of using available data in a different way, to locate debtors faster. The data available through Marketing Pro was static and most of the time way out of date, but despite this limitation, I still got some good hits on it.
Data should be analysed on an ongoing basis and a ‘test and learn” approach should be adopted to optimise collections strategies. As many in the collections industry are aware, there are so many different data bases available now and this presents a great opportunity, but equally important to access to those databases is knowing how to use the data available.
Looking ahead, it may well be in future debt collection there will be no or limited need for skip tracing activities given the provision of accurate and up to date data is increasingly much easier to procure, with the help of specialist data providers and data washing companies, who can find debtors fast and efficiently using millions of records gathered from 100’s of different data sources, both public and proprietary.
Some providers also offer automatic data washing facilities. In very simple terms, “data washing” which is sometimes also known as “data scrubbing” and “data cleaning”, is the process of detecting and correcting (or removing) corrupt or inaccurate records from a data record set.
An easy to understand example of data washing is the situation where a list (the data record set) of telephone numbers is “washed” so that any incorrect numbers or dis-connected numbers are deleted or updated, leaving you with a nice “clean” phone list for your collectors to go to work.
The data washing process will generally analyse bulk data files and correct, update and score the records demographically. Such data wash systems can process a whole book of recently purchased debtors or overdue accounts to obtain updated contact details – the results enable us as collectors to prioritise which debtors we wish to target first and to reconnect with them quickly. The data wash systems validate existing records, repair broken or invalid records and even append new contact information. It’s amazing next level stuff!
Advantages for debt collectors and their clients
So what’s in it for us? The key advantages of using data effectively include:
- Time saving – the activities of skip tracing, reporting and data analysis, if done manually, can be incredibly time consuming, especially if dealing with volume debts. This time saving advantage alone is a “no brainer” and should be enough motivation to embrace utilisation of data washing processes.
- Improved contact and response rates – better hit rates with debtors and better response rate are always the goal. Improvements to your data especially contact data will make your collector’s job a lot easier and allow them to concentrate on engaging effectively with the debtor to achieve recovery.
- Decreased costs – another win-win and a no brainer. Who doesn’t want to decrease costs? Eventually, data analytics will be able to significantly reduce the reliance upon skip tracers and collectors – saving money on the biggest expense in debt collection – salaries.
- Increase in recovery rate – this is the real bottomline. As a contingent debt collector, an increased recovery rate is a direct increase in sales and in turn hopefully your profits. Your clients will be happy too!
Rich, current data, will enable us as debt collectors to better understand our debtors. We will be able to reach debtors more easily to get conversations underway so to be able to close accounts more quickly. The clients will be happy as we will be able to recover more money faster.
Debt Recoveries Australia is the expert at recovering your outstanding debts without the drama. For more information, email us at firstname.lastname@example.org or call 1300 799 511. Tell us your problems on Skype at “debtrecoveries”.
This article was previously published in December 2016-January 2017 issue AGENT, the official magazine of the Institute of Mercantile Agents Limited (IMAL). Established in 1961, the Institute of Mercantile Agents Limited (IMAL) represents collectors, investigators, process servers and repossession agents throughout Australia.