What is the current situation with student loans in default in the United States this year?

Using Technology to Increase Efficiency in the Collections Industry

The collections industry has come a long way in its technological prowess, making the process of collecting unpaid debts easier across the board, despite tough economic times.  With a wide scope of technological platforms and software available, your collections agency can operate smarter and more efficiently, allowing your staff to prioritize and plan their strategies better. 

Many software platforms offer unlimited configuration capabilities and an intuitive user interface. For example, there are platforms which provide each user with a personalized view of the system, depending on their role in your company.  This means that software can be customized depending on who is viewing the screen: Reps and Agents, Supervisors and Manager, Executives and Accountants, Creditors and Debtors, Analysts and System Administrators.  This allows you to organize your collections operations in a hierarchy of groups, collectors, supervisors and external users to define automatic case assignment decision rules.

As additional components, with many software platforms created specifically for the collections industry, you can:

·         Assign collection tasks among different collector groups, agents and back-office support groups.

·   Include creditors and debtors for approval of payment arrangements, deduction or settlement authorizations.

·    Automate case assignment rules among different collection groups and task assignment rules for support groups.

·         Establish special rules and conditions for collecting cases based on each client contract.

·         Trigger alerts according to collections performance, activity or inactivity.

·         Know the best language to contact your debtors.

·        Allow foreign language speaking agents to use the software application in their first language.

·    Assign accounts that have a preferred foreign language to a sub-group of agents that speak their language.

·        Customize application alerts and messages according to user language.

·    Send communications such as letters, emails, SMS and other reminders in the debtor’s preferred language.

·       Set a schedule of automatic and suggested actions according to the case profile.

·      Trigger different collection stages based on case aging and elapsed time from placement.

·       Ensure consistency in planned follow-up actions and maintain fluid communications with debtors.

Retaining Good Employees and Motivating Staff in Tough Economic Times

The collections industry has certainly seen easier times than the current economic and fiscal climate.  With escalating consumer debt and an economic recession still keeping many debtors unwilling or unable to pay their bills, employees of the collections industry face difficult and demanding shifts dealing with people who are both stressed and distressed.  So in the midst of all that stress, how do you motivate your employees to stay in the industry without running away as fast as they can? 

With incentives that work, you will be able to increase the morale and loyalty of your staff members while helping them achieve greater productivity in a challenging work environment.  Although monetary rewards are usually the best incentive for employee retention and boosting morale, there are several non-monetary incentive schemes that can be used, as well, to increase your staff’s commitment to the job.  Better working conditions, better communication with management, time off and contests are always great ways to provide non-monetary incentive to your employees who perform well. 

One way to measure employee performance is “promises to pay per hour,” which involves calculating the percentages in which your employees are able to reach successful negotiations with debtors with a promise for payment.  Additional performance measures can be assessed when contractual payments are upheld by debtors, and payments are made based on a promise to pay that the employee initiated through his or her contact with the debtor.   

However, one of the best ways to provide non-monetary incentive is through greater recognition of high performance.  Publicly recognizing employees for a job well done can be one of the most effective methods to encourage employee retention and maintain positive employee motivation.  The desire to be “top dog” in a work environment will lead many employees to put their best effort toward successful collections.  Such recognition usually suggests future advancement in the company and increased wages with that advancement, so employees will look at it as a type of future monetary reward. 

Government Collections and What a Government Contract Can Mean for Your Collections Agency

According to ACA International’s website, the U.S. Government obtains the help of private collection agencies to collect on non-tax debts that are owed to the Federal Government.  The agencies that use PCAs for collections purposes include the U.S. Department of Education, the Department of Health and Human Services and Department of Treasury’s Bureau of Financial Management Service. 

According to the site, “in fiscal year 2010, PCAs under contract with the departments of Education, HHS and Treasury had referrals of $35.9 billion in delinquent federal debt. PCAs collected $777 million in FY 2010.” (Source: Department of Treasury Fiscal Year 2010 Report to the Congress—U.S. Government Receivables and Debt Collection Activities of Federal Agencies)

The government seeks private collections agencies and collections attorneys to assist with its debt collection and aid in establishing repayment agreements with debtors.  The government also hires private collections agencies and collections attorneys to help determine whether a debtor is deceased, disabled, bankrupt, or out of business.  In addition to the Federal Government, state governments also use private collections agencies to collect on delinquent taxes and other debts owed to the state. 

Can collection agencies acquire government contracts?

The Rewards and Pitfalls of International Collections

For a collections company looking to expand their business and horizons, international debt collections is a viable option to put your company on the track to more money and more clients.  In an increasingly global marketplace, companies are doing business with third-party contractors from other countries who might offer great prices at the beginning of a business enterprise but end up failing to pay. 

As this situation becomes more common, these companies and small businesses will be looking for collections agencies and collection attorneys who specialize in this unique form of collections.  Since few collections agencies offer international collections, your company would have a lucrative advantage in a specialized area that is too often under-represented in the United States. 

While the advantages and rewards are immediately apparent, there are several pitfalls along the path of international collections that should be considered before you branch out into this arena.  Below are some issues to further research before making the decision to accept international collections tasks from your clients. 

1. Different legal requirements—branching out into international collections means facing an entirely new set of legal requirements for collections practices, depending on the country where the debtor resides and operates.  These legal requirements can create hoops that are tricky to jump through and must be thoroughly researched before taking on a case. 
2. Foreign language ability—language obstacles present a significant hurdle to debt collections, and might require the use of translators to effectively communicate with the debtor and with the necessary legal agencies in the debtor’s country of residence and business operations.  This presents an added cost to your base operating expenses that is not always necessary in collections within the United States. 
3. Time zone differences—since you will be on a vastly different time zone than the debtor, this obstacle might present challenges for communicating with him or her.  In addition, as there are US laws regarding the times in which a collector can communicate with a debtor during the nighttime hours, these laws are also present in other countries, increasing the challenge. 

What are some ways to ensure employee retention at a collections agency during tough economic times?