Wallet
Image by Mike Montgomery on Unsplash

At some point, almost all creditors engage in this cost-benefit debate: Should our organisation continue to manage its own collections or outsource them. From a surface level, retaining an in-house collections process would seem to be the most logical and cost-effective decision for companies. After all, they have existing relationships with their customers that they want to protect. Furthermore, they often mistakenly assume that in-house management allows them to retain a greater percentage of their collections.

Collections decisions are never made in a bubble. They are always driven by a range of issues including delinquency rates, reduced margins, and increased oversight from senior management. In this complex environment, improved operational efficiencies and reduced operation costs tend to be primary considerations. The broader consequences associated with the collections process (including the potential damage to the customer relationship and increased regulatory risk) are given much less consideration.

In particular, far too many companies fail to properly weigh the pros and cons of brand equity when making collections decisions. It is frankly unwise to value collecting a debt over preserving the brand image that has been painstakingly developed by your company. This component is often ignored, but it may be the key factor in creating long-term value for your company and its stakeholders.

Collecting a Debt Versus Preserving Your Company's Brand

While collecting a debt from your customers is certainly important, your brand can face significant repercussions if collections are performed poorly. The negative impact of poor collections processes extends far beyond any individual customer. For example, if a grieving widow posts a tweet about how aggressively she was contacted regarding her late husband's credit card obligations, your positive brand image can be erased in a matter of hours.

Experienced third-party collections firms like PCA Global recognise that collecting a debt from a customer is only half of what they do. The other half is protecting your carefully-developed company brand image during a very emotional time in the customer relationship. PCA Global believes that utilising a combination of empathy and effectiveness creates better outcomes for all parties involved.

Deceased Account Collections - A Sensitive Matter That Requires Empathy

Deceased account collections present a unique challenge due to the complexity of the regulations governing these types of accounts and the emotional challenges experienced by individuals dealing with the loss of a loved one. The potential for negative publicity impacting the brand of a creditor is very real.

PCA Global has implemented specific protocols for collections involving deceased accounts and complies with Federal Trade Commission provisions governing this work. PCA Global verifies the identity of estate representatives before contact and ensures all communications comply with applicable federal and state laws while demonstrating respect for the deceased and their family members.

Individuals experiencing grief are typically consumed with making funeral arrangements, managing the estate of their loved one, and coping with their own grief. Collecting calls from creditors can be overwhelming to those who are already trying to manage their emotional state and are facing urgent responsibilities that they had never anticipated. PCA Global knows that how a company handles itself in a moment of extreme vulnerability is a true reflection of that company's values.

The Temporary Nature of a Consumer's Financial Problem

Many creditors mistakenly view consumers in collections as 'deadbeats' rather than as consumers who are temporarily experiencing a financial problem (e.g., medical emergency, unexpected job loss, divorce, natural disaster). Research consistently shows that the vast majority of consumers who are in collections intend to pay their debts and eventually do.

PCA Global's empathetic approach to debt collection stresses the often temporary nature of customer financial problems and offers customer payment plans that reflect individual budgetary capabilities. If a customer provides documentation that demonstrates financial hardship, PCA Global will temporarily suspend collection activities. The team at PCA knows that customer relationships have inherent value that extends beyond any account deficit.

The Maze of Regulations

Year after year the regulatory framework governing debt collection becomes more complex. Beyond the CFPB, state Attorneys General offices and consumer advocacy organisations are always watching.

One error can lead to an investigation; one pattern of customer complaints can lead to a Consent Decree limiting your business activity; and one adverse Court ruling can set a precedent that might hinder your debt collection activities for years to come.

Why In-House Debt Collection is Creating More Problems Than Solutions

It takes a large capital investment and resource commitment to stay current with the technological advancements that drive modern collections. This includes systems to record every phone call made for regulatory compliance; payment processing systems that meet PCI standards; compliance monitoring software; and CRM systems to track all communication between your company and the debtor.

The biggest hidden cost of collecting debt in-house is the inability of internal employees to remain emotionally detached when collecting debts. Your customer service representative assisted the consumer to enroll in services, and now that same rep is trying to collect on the account. This creates a strained dynamic, and your brand is stuck in the middle of the mess.

Alternatively, third-party collections agencies provide a clear division between the company and the consumer. They are seen as neutral parties that can help the customers resolve their financial obligations. Third-party collectors also recognise that collection volumes often fluctuate seasonally or follow ongoing economic patterns. This often dictates the reduction or expansion of collections efforts over time. A third-party agency can respond to changing collections needs rapidly and effectively. On the other hand, internal collection personnel are either idle during slow collection periods or overwhelmed during peak collection periods. And neither of these scenarios is cost-effective.

Strategic Collections Decision-Making

Deciding to partner with a collections agency is far from an admission that you are unable to perform a function internally, It is about recognising that some areas of business require unique and/or specialised knowledge/expertise. Collections is certainly one of these areas.

Over the three decades, PCA Global has optimised collection processes to achieve the maximum recoverable amount while maintaining positive relationships between customers and creditors. The agency has invested in the technology, training, and people to perform compassionate collections on a grand scale.

When you select Phillips & Cohen as your collections partner, you are protecting your brand, reducing your liability, and treating your customers as you would want to be treated should you find yourself in the same position.

That is not a cost center; that is a competitive advantage.