How to Use Automation and Virtual Collection Systems to Reduce Costs and be Profitable

The economic problems of the past 5 years have been significant, resulting in the double-edged sword of increased collections opportunities AND increased difficulty in collecting on those accounts.  In order to compensate for increased accounts and increased need to cut on expenses, collections firms are learning to make use of the benefits that automation and virtual collection systems can bring. 

The term ‘virtual collections’ generally refers to applications that include:

1. Electronic payment options
2. Automated negotiation features
3. Interactive collection communications (ICC), such as the Internet, e-mail, text messaging, and interactive voice response systems (IVRs)

Through the use of an automated collection system, it’s easy to offer delinquent customers the opportunity to agree to an individually tailored settlement any time of day or night, 7 days a week.  These automated systems allow collection firms and collection attorneys to collect on debts immediately online and use real-time credit scores to help determine the customer’s ability to pay on a debt.  Such information can be vital in providing a suitable automated negotiation that will be mutually beneficial to both the collector and the delinquent customer. 

You’ll find that the payment initiation procedures vary, depending on the virtual collections system used.  Some virtual collections systems will be limited to electronic bill pay, while other will add more extensive features allowing debt negotiations.  The types of payment channels will differ, as well, with some collecting mainly via credit or debit cards and ACH payment, and others offering additional features such as PayPal and other online payment portals.  These additional payment initiation features can help with your collection efforts, as many delinquent customers make money on the side through eBay or Craigslist and are often paid for these transactions through PayPal. 

The greatest benefit to virtual collections systems, however, lies in their ability to provide advance reporting and analytics regarding collection accounts.  This, combined with the feature of real-time credit report information, help collection agencies determine the extent to which their delinquent accounts should be pursued based on the customer’s most up-to-date credit information.