There are numerous challenges the collections industry is facing due to regulations, evolving technology, and demographics. It is more complicated than ever before to locate debtors in the current highly-mobile society. Even though there’s more than sufficient information available about individual debtors, sorting through it is nearly impossible. This article will help you answer the question, “What challenges do debt collection agencies face?”
It isn’t likely to face scarcity of information on an individual in the digital age. However, finding accurate and current information about a debtor isn’t easy. Successful recovery of debt depends on the ability of a collector to contact the debtor.
But, it’s almost impossible to contact a debtor without current information, and consequently, it may be impossible to recover a debt. There are various reasons why an organization can lack up-to-date debtor contact information.
When you take into account the newest debtor generation, the list can get longer.
Rather than limit individual information, technology will, in the future, make it more available. Even if the excess information is the problem, it won’t be solved by reducing debtors’ available entries.
The root of the problem is the inability to verify the information. The solution lies in establishing multiple verifying information methods, such as having transparent sources of information and ensuring data is regularly updated.
There shouldn’t be any doubt why insufficient information to contact and identify debtors is an issue. This problem leads to serious hurdles when contacting debtors and leads to obstruction of successful debt recovery. Lack of information is more than a waste of resources and time and can feel frustrating. Additionally, it forms a barrier when trying to take action on an account.
When there isn’t sufficient information on an individual’s public records, an organization may not be able to successfully contact or identify a debtor. This isn’t likely the case considering the vast amounts of data stored in public records. While there may be facts about a debtor, this information isn’t where anyone would expect to find it.
This is why organizations face issues when it comes to communication and identification. This can be due to various reasons, and there is a need for a more comprehensive view of public records, like examining the third-party connections of a debtor to overcome the problem.
Information such as an address or a phone number isn’t what’s most likely to lead to recovery for some debtors. It could be information about their associates or their place of work. Unfortunately, unlike straightforward records, this information isn’t easy to access. In turn, this can lead to additional time-wasting while trying to access and locate this data.
The cause of this problem could be the inability to access such information since public records aren’t accessible for any purpose on any platform. The solution to this is ensuring your organization can access such databases. However, this may cost a lot and consume a lot of time. Another option is to get the information needed faster by paying a third party with the infrastructure to get it.
This is another issue that’s a result of “excess information”. Other than determining whether the available contact information is current, there’s too much time spent by a collector trying to evaluate which information is more suitable to reach the target. It isn’t wise for an organization to exhaust so much of its time on a single debtor.
However, it’s vital to ensure that the information that’ll lead to recovery is what you’ve gathered. This is especially the case for accounts that have too much data available. This issue is caused by a lack of proper organization of the excess information. To ensure effective recovery, it’s necessary to evaluate all the information about a debtor. It may not be possible to manually look through all records on the downside since there’s too much data available on an individual.
This article focused on information/data (and/or the lack thereof) as one of the main challenges debt collection agencies face. There are, of course, other challenges they face such as being categorized as a high risk business. This is a stigma that affects several aspects of business operations and can make it a lot more difficult to obtain business relationships like merchant accounts. It certainly puts debt collection agencies at a disadvantage for services such as credit card processing. We will cover several of these topics in subsequent articles, so stay tuned.
First, we must define what a high risk business is. Then we can determine if your business falls into one of the two main categories for high risk.
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