As a lender, you know that delinquency in a loan portfolio is to be expected. Life happens, and borrowers will encounter unexpected interruptions that may impact their ability to repay their loans. This is where the collections process comes into play. While this process can make a significant difference in your loan portfolio’s delinquency, the steps for recovering funds can be time consuming, expensive, and inefficient without the right process and tools in place.
For many, the solution to streamline this process is outsourcing their collections. This allows the credit union to gain back valuable time while their collections provider acts as an extension of their credit union to help their borrowers through the collections process. It’s imperative to vet any partner that your credit union works with, and an outsourced collections partner is no exception.
Here are four things to consider when looking for an outsourced collections partner.
No. 1: Do they have a robust team of professionals?
Acquiring the right team to act as an extension of your credit union is vital. It’s important to keep this in mind when looking for an outsourced collections partner. Having a comprehensive talent acquisition program in place can help attract new talent and assess skills. Third-party vendors who know where to look for quality candidates (i.e., holding job fairs, scouting local universities, employee referral programs) can make a difference in the experience that your members receive. The initial hiring process of vetting the candidates can also help weed out individuals who are not up to par with the outsourced collections team expectations.
No. 2: Is there a comprehensive training program in place?
You could easily argue that a comprehensive training program is one of the most important items when considering an outsourced collections partner. This is where a collector will learn skills on how to excel when it comes to etiquette, where they will learn about the collections process, and where they will learn how to comply with regulations.
Training programs should include both classroom and real-life trainings. This will allow collectors to learn the ins and outs of their role and also apply what they have learned in the classroom setting to real-life situations. With the right people management, coaching, and training in place, you can feel confident that your members will experience the kind of service that your credit union would provide them.
No. 3: What is offered for quality assurance and compliance?
A successful quality assurance program should help detect and prevent defects in the collections process. In order to achieve this, live phone calls should be recorded 100% of the time and reviewed by a quality assurance team member. In addition to quality assurance, you need to uphold the reputation that you have built with your members, and ensuring that your collections partner adheres to all compliance regulations should be of the upmost importance. While compliance should be a major component of the training process, it also must be an item that is always top of mind. In the collections industry, regulations can change often and therefore your third-party vendor needs to offer guidance, best practices, and policies and procedures to their staff.
No. 4: What kind of client support will you receive?
Client relations and support will be what helps you understand and successfully work with your partner. The outsourced collections team should be responsible for providing you monthly performance reviews and reports, creating collections strategies to meet your goals, and offering ongoing support well after the implementation process has been completed. Client support can offer a lot of value and answer all of the questions that you may have about your outsourced collections efforts.
When you choose to outsource your collections, it should be a seamless transition for both your employees and members. While the vetting process may take some time, it is worth the effort to ensure that your partner offers all that you require as they become an extension of your credit union. With an effective collections program in place, you’ll be well on your way to a streamlined risk management process for your credit union.
To learn more about outsourcing your collections and managing your risk, download SWBC’s ebook, Recipe for Risk.
Connie Shoemaker is vice president of operations for the Financial Institution Group’s AutoPilot® Services at SWBC.