5 expert-backed tips for working with multiple collection agencies

How do you get the most value out of partnering with collection agencies?

With over 30 years of experience in collections leadership spanning organisations such as SoFi, Citi and Upstart, there’s no better person to ask than Justin Parker, Senior Advisor at 2nd Order Solutions. So we invited him to join Josh Foreman, our CEO & Founder, as well as Tracy Glen, our Chief Client Officer, to share what he’s learned in this episode of Better Debt: Innovating and diversifying your collections panel.

Let’s break down the top takeaways from the session.

1. How to select the right collections agency

You wouldn’t use a fork to eat soup. In the same way, meeting your collection goals means partnering with the right agency for the job, instead of taking a one-size-fits-all approach.

When reviewing your options, start by understanding the different product types, borrower segments, and stages in the collection lifecycle that the agency has experience with.

Here are some examples:

Product type: If you have both secured loans and unsecured loans in your portfolio, you might want to select a partner that specialises in each of those segments.

Lifecycle stage: Are you collecting at the pre-charge off or post-charge off stages? This will determine the capabilities you’ll prioritise in a partner; for instance, one that’s good at negotiating settlements vs. one that preserves your customer relationships so that they’ll be inclined to re-purchase, once they’re back on their feet.

Borrower segments: Do your customers mostly originate their loans online? If so, they might prefer to manage their accounts independently using a seamless digital portal, which a partner like InDebted has ready for you to use. Or, do they reach out to your team instead? If that’s the case, you want to make sure your collections partner has a team of trained, friendly agents readily available to deliver a positive customer experience.

Having a panel where you can lean on specialist experts will also help you to test different strategies against different segments, compare each agency’s performance, and ultimately meet your collection goals.

2. Create a framework to screen your potential partners

Putting out an RFP? Justin recommends establishing a framework for screening potential partners.

Here’s Justin’s top criteria to consider.

3. Use key performance indicators (KPIs) and scorecards

It’s important to have a scorecard with KPIs that tie back to your organisation’s goals. These metrics will help you:

1. Measure the success of the different agency partners you work with
2. Keep track of the share of your portfolio that’s being distributed to each agency
3. Identify which agencies to continue leveraging or give more work to
4. Identify agencies that may no longer meet expectations
5. Drive performance and accountability in the partnership, ensuring agencies are tracking to the same goals

Having a scorecard in place will do more than help you keep track of the ROI. It’ll empower your agencies to become more than just vendors providing you with a service — and instead become true strategic partners, invested in your organisation’s growth and success.

4. Co-innovate with partners to adapt to changing regulations

When there are regulatory changes, whether at the local, state or federal level, it’s crucial to adapt. That’s where it’s important to work with innovative partners that plan with you, ask the right questions, and make sure that you’re able to improve your collections performance in a fully compliant way.

For example, when Reg. F was introduced in the United States, it changed debt collection communication practices. Tightening limits on the number of calls, while promoting modernisation by green-lighting digital channels within specific guidelines, Reg F has encouraged the industry to evolve their communications tactics. Having prepared for Reg F from the get-go — including creating a Reg F Committee to ensure that all potentially impacted business practices complied with the new requirements — we were well-positioned to help our clients navigate the changes and identify opportunities to improve their customer experience.

Our product, Collect, also uses machine learning to give customers a personalised way to repay their debt, so they can communicate in their own time and on their own terms. All this means we can help clients ensure compliant collections, reduce manual processes, and improve collection rates by up to 40%.

5. Stay connected, network, and build strong partnerships

Lastly: don’t underestimate the value of building a strong network and staying connected with peers, regulators, and industry partners.

Justin recommends three key ways to stay ahead of the curve in the collections landscape.

1. Get to know your peers at similar institutions. Active listening, gathering knowledge, and being open to new ideas and innovations will go a long way to not just keeping you informed, but ready to spot opportunities to improve your performance.
2. Pay attention to your regulators — subscribe to their emails and news briefings so you stay up to date, and ask them questions if you’re unsure about how the shifting regulatory landscape is going to potentially impact your business.
3. Stay dialled in to the agencies, consultants and partners you work with. They’re exposed to a lot of other businesses and can share their insights regarding new innovations, different techniques, and more.

If done right, mixing up your collections panel can be a game changer for your organisation, helping you to achieve results that go beyond simply meeting collections targets. To truly maximise the value of your agency partnerships, it’s critical to select the right partners, and approach the relationship as a collaborative effort.

The best part? The experts in this episode of Better Debt have already given you all the answers to getting started. Watch it in full and get ready to take notes, because these are time-tested tips that will never miss.