Given the current economic state of affairs, the need to develop an effective collection strategy has never been greater. Unfortunately, the quantity of collection accounts has never been higher and the demand to prioritize which accounts get selected for additional recovery procedures becomes very difficult. The good news is there are three industry best practices that can help.
First, a business that is no longer in business is probably not the best choice for recovery efforts. No matter hard you try, you won’t get those businesses to pay. One way to determine if a business is still active is to evaluate the degree to which that business is receiving updates to their credit profile. If a business is receiving frequent updates to their credit report (either by new trades being reported, additional inquires, or changing account balances) it is a very good indicator that the business is still active. If active, then chances are good the business is open for recovery procedures.
Second, if a business is in bankruptcy, then collections efforts might be difficult. Given changes in the bankruptcy laws, certain lender liability issues are at risk with respect to various recovery strategies. Having access to a bankruptcy indicator from the credit report will give collection agencies and lenders a signal that these liability issues need to be addressed BEFORE attempting recovery efforts.
Third, collection recovery scores such as the Collection Priority Intelliscore are available to help predict the likelihood that amount placed for collection will be collected over a period of time. This is extremely helpful in prioritizing recovery. For example, a business that scores ‘high” (a high probability of collection) should be placed first in the recovery queue because that business demonstrates the best odds of paying at least a portion of the amount placed for collection.