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Debt Collection Process – «The Forgotten FinTech»

Debt Collection Process

Debt Collection Process – «The Forgotten FinTech»

¿Why is the Debt Collection Process important?

Debt Collection Process, «The forgotten FinTech»

We are convinced that an efficient Debt Collection Process has a great impact on the economy, interest rate levels and the possibility of companies and small businesses to access better credit lines by retro-feeding the impact on the economy, also by improving their working capital as a virtuous process reducing their financial needs & costs. The Debt Collection Process,  is a forgotten chain,  in the business chain process of companies. In the Fintech boom, it still remains.

The difficulty that companies have in Working Capital Management, that is, the money they use for their operation: buying, producing and selling a product in the market.

PROBLEM – «The impossibility of collecting invoices for sales on credit and its impact on Working Capital»

  • A fundamental part of this cycle is to be able to recover credit sales effected efficiently to avoid financial problems.
  • 70% of companies in Latin America are financed only with their own resources, without being able to resort to external financing.
  • Of that 70%, 50% do not have a Methodology, Processes, and Systems that allows them to recover or collect their sales to avoid financial problems or even bankruptcy.
  • Lack of working capital, in many cases, is generated by poor collection management processes, which in turn produces higher costs to the entire system, banks, companies and the impact on the interest rate level.
  • Give right tools would help everyone in this process, including Central Bank.

¿WHY? – The efficient Debt Collection Process Management is so important  

  • An efficient debt collection process has a great impact on the economy, the levels of interest rates and the possibility for companies and small businesses to access better retro credit lines, feeding the impact on the economy.
  • Make available an efficient way to manage debt Collections, has a great impact on Companies, their Working Capital and their possibilities of growth or survival
  • In aggregate form, in interest rates and the economy. If companies pay their credits, there is more credit available at better rates.
  • A good collection process helps manage working capital and in a virtuous way reduces the need for funds and financial costs.
  • Efficiency offers a reduction of costs and resources. Optimizing the use of working capital makes companies more profitable
  • A coordinated process of work teams within the company allows interacting with the debtor client in an integrated manner.

¿WHAT? – It is to manage debt collections efficiently

  • It is to solve the lack of coordination, the use of measurable and effective processes and the use of the methodology to manage.
  • Efficient management involves working on several stages of the Debt Collection Process
  • It is fundamental to define them, coordinate them, defining responsible persons, resources and control form.
  • Include the use of best practices in the management of Accounts Receivable.
  • Give tools not only to the team that manages but to the rest of the company that also interacts with the client (operations, sales, finance)
  • Work in multiple channels of contact with the client in a coordinated manner.
  • Coordinate the process through stages that include the use of simple and measurable tasks.
  • Coordinate the interaction with the client, contacts, response, follow-up and offer integrated information and means of payment.

Carrying out this coordination with a manual method is extremely complex. That is why we propose the need to define and automate the Debt Collection Management process. In this example, we include a 9-step process. It begins with the processing of the delinquent portfolio and culminates with the recovery/payment. These are the stages, with variants applicable for both B2B and B2C Management:

  1. Validate data relevance
  2. Define segmentation
  3. Segment the portfolio
  4. Assign customers
  5. Run campaigns
  6. Supervisión
  7. Customer Management
  8. Define the type of client (B2B/B2C)
  9. Management reports

¿How? – Manage Debt Collections efficiently

  • Put the client in the center, first.
  • Automate management through a system
  • Coordinate the interaction of the 4 pillars that make the process efficient:
  1. – Establish Processes: That is efficient, measurable and controllable
  2. – Use the best practices of Collection Management, will allow us to organize tasks, plan resources and manage them through a plan.
  3. – Train and offer good practices to the management team, enhancing their work with a system that facilitates interaction with customers.
  4. – Organize the management supported on a system that automates the processes, organizes the management and optimizes the results.

        Processes + Best Practices + People + Technology

The Debt Collection Process

Digital Transformation is about People, the way we do business

and how each person works in a company in a new and collaborative way. It is also an opportunity to rethink Processes and a way of Technology supports them.

Successful Digital Transformation does not only come from implementing new technologies but from transforming the organization to take advantage of the possibilities offered by new technologies.

Fundamentally supported in a digital platform of data and integrated processes.

Since data integration is the biggest challenge in the creation of digital services 

Re-define what and why people do what they do, to transform the current business model while optimizing operational efficiency and reducing costs. In short, it’s about reinventing your business process.

Most digital transformation initiatives are focused on rethinking, re-imagining and empowering:

  • Customer Experience
  • Operating Processes
  • Business Models

In our experience, Simple Solutions are the best, as long as they maintain speed in innovation, flexibility, and adaptability to market changes.

Impact of Digital Transformation on Debt Collection Process is BIG since it impacts fully on the three types of initiatives that we comment on and that basically are: 

  • As we reinvent Client Contact (customer experience) and the instantaneous interaction with the workflow. We have important information to negotiate or provide the best possible offer, generating an integrated, effective communication channel and getting instant feedback on our collection strategy that we are applying to the portfolio.
  • Operating Processes improvement in the strategy automation, tasks assignment, validation, and centralized database administration of an easily accessible and integrable that allows centralized administration. Making information available from any place and device.
  •  Business Model Optimization in order to reduce resources needed to achieve recovery goals, using call center operators strategies, Massive Actions (Mail / SMS / IVR / WhatsApp) and integration with massive payment means.

Digital transformation in Debt Collection Process is nothing more than reinventing Client Contact, exponentiating Operating Processes and optimizing Business Model, supported by the application of Methodology, Systems and empowering People who use it

Imagine for a moment, managing the entire Debt Collection Process, optimizing resources, automatizing tasks and defining the Client status, so that interaction through a Client Portal (landing page), calls or automatic actions (mail, SMS) has instant feedback and impacts on workflow and in the online management of a Collections.

Digital Transformation is modifying the way in which the Debt Collection Process can be carried out, allowing to maximize control and measurement of the productivity of each contact, the effectiveness of Campaigns, according to different indicators, allowing to improve tactics and strategies in the Collection Process.

The debt collection process can be optimized by Machine Learning.

Every company that focuses on its customers listens to them and helps them will be successful.

In Debitia, we use of Simon Sinek`s methodology that puts the client in the center. Its author emphasizes the importance of focusing on the Why, as the center of the work and existence of every company. It is quite a challenge to use it.

Do you have any questions? We want to know how we can help you

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Esta entrada tiene 20 comentarios
  1. Hello, very interesting read, I would like to get more detail on the Optimization process and also understand how to automate the process, thanks

    1. Hello Karen,
      We run an optimization process based on Machine Learning with almost 6 months of data. It means you have to record every contact with customers in our CRM. Also, take note for promises and payments, and record them.
      Prior to optimization, Debitia run campaigns to contact customers and assign to a call center or person that contact customers.
      Debita is based on our framework that matches an industry vertical and automated business process, after a very deep knowledge about it works. So, in the case of Collection, we matched any important process and good practice. Then we bring a workflow that manages and connects any important process with decisions maker, strategist or executor.
      We did it before in telecommunication vertical, take a look at this: https://www.youtube.com/watch?v=bbKHsNcZkzE

      You can contact me any time

  2. Thanks for sharing, this is so clear. ¿Is it possible to build campaigns based on a combination of IVR responses and customer responses?. Nadia

    1. Hello Nadia, yes of course.
      Based on feedback from customers (answer) or IVR feedback (option pressed) you can run campaigns.
      Also, we bring a Machine Learning based engine that allows to optimize campaigns and reduce cost in customer contact contacts & call center effort.

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