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Uncovering the Hidden Costs of Debt Collection: Optimizing the Workforce

There’s just no way around it. Chasing delinquent accounts is expensive. In addition to labor, overhead, and infrastructure there are hidden costs. Before you realize it, inefficiencies and wasteful practices are producing administrative delays, unpredictable cash flow, an ineffective staff, and low morale. But there’s good news! With a little investigation, organizations can spot the warning signs of costly pitfalls and steer clear of dangers before they become money-sapping roadblocks.

This is the first of three blog posts exploring factors that help organizations solve problems that lead to unanticipated costs and shore up their bottom line: people, processes, and technology.

People First

Staffing — including salaries, benefits, training, and recruitment — represents a sizable chunk of any organization’s financial burden. It’s a greater issue for businesses that deal with debt collection because of the ongoing training and skills development required to keep pace with constantly evolving regulations and ever-growing channels for consumer engagement. Brand owners and lenders that manage their own accounts receivable teams – where collections might not be a core competency – often suffer from higher than expected costs for recruiting, training, and retention.


A rigorous approach to rightsizing involves questioning where and how an organization is underutilizing or overutilizing roles within the ARM operation.


Turnover is a constant. Regardless of whether one uses an in-house team or outsources, continuity is important to managing costs. Unfortunately, contact centers are traditionally high-turnover workplaces, and that can mean lost productivity as new staff take time to ramp up. However, when we dig deeper into precisely how workforce assets are structured and staffed, we find deeper problems that can, at once, be systemic and unnecessary.

The Question of Rightsizing

When we’re talking about collections, rightsizing typically means getting the right number of callers at the right time. But when we consider the specific skills necessary throughout the organization — not just for agents, but for administrative, legal, and other support staff as well — we get a clearer picture of how to control the costs.

A rigorous approach to rightsizing involves questioning where and how an organization is underutilizing or overutilizing roles within the ARM operation. One might probe, for instance, whether there are too many attorneys on staff or not enough. A further drill-down might reveal whether some legal tasks could be assigned to paralegals or legal clerks. This process can lead to additional questions that may be highly-nuanced, but are mission-critical nonetheless.

“It’s easy to ask why we’re using a lawyer with 20 years of experience when, on the surface, it seems like something a paralegal with five years of experience could handle,” explains one industry veteran. “But what if we take that too far? Given the regulatory environment we’re operating in, are there times when we’re safer keeping that task with an experienced attorney?”

To avoid spending too much – or too little – focus on rightsizing that goes beyond typical labor cost assessments or even common productivity measures like discounted cash flow analysis to calculate the precise cost of unpaid debt. Your rightsizing mission should encompass all organizational roles and how best to staff and structure them.

Management Issues

One of the more important things contributing to an operation’s success is its leadership; how and where managers are trained and positioned is especially critical. It’s a challenge to find, onboard, and train managers who have enough career experience to do the job and who continually update their skills to keep pace with current industry regulations and best practices.

Collection managers must be current with the latest regulations and compliance pitfalls. Their soft skills in dealings with agents and customers have to reflect the latest industry trends around collaborative problem-solving and active listening. In addition, managers have the added burden of overseeing an expanded, omnichannel universe for customer engagement that goes beyond that initial phone call.

It’s a whole new ARM world with diverse touch points and contact channels with phones, letters, texts, emails, and web portals. Managers must be channel-literate and grasp the sophisticated data and analytics needed to navigate omnichannel success. And of course, they must be able to coach and nurture their subordinates on all of these skill sets.

Handling the Challenges

Staying ahead of the hidden cost traps is easier if you ask the right questions:  Do supervisors have the appropriate level of experience? Are they breaking down silos and putting enough centralization in the right areas? Do they cling to legacy skill sets that aren’t current? Can they work with behavioral data and analytics reports?

Once you’ve looked at your people issues, you can start thinking about your business processes and your technology tools – two other places that may be hurting your productivity and costing you money.

 

— Gary Dorman, Director of Operations (@wrg_gdorman)

2017-08-24T13:47:21+00:00 April 6th, 2017|Blog|