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Baton down the hatches. Challenging collections may be ahead

October 06, 2013 by Gary Stockton

Hello again. In part four of our voyage of the credit customer life cycle we discussed the strengths of ongoing comprehensive portfolio management to uncover hidden opportunities in your customer portfolio. This week as we head for home port to complete our journey we cover best practices for debt collection.


Even the most seasoned sailors occasionally experience rough seas. It’s then that they need to draw upon their skills to make it safely back to port.

In the credit industry, collecting debts can be as challenging as troubled waters. Credit managers often consider collections as the beginning of the end of the customer life cycle and the phase they hope their customers never reach. Unfortunately in today’s economic environment, an increasing number of customers are reaching this point. Getting paid requires the focused attention of collections professionals.

Although the collections process has had few innovations in recent years, there are tools that can help improve outcomes. For example, to ensure communications efforts with the debtor reach the right person or department, consider using a commercial skip-tracing tool to uncover alternative contact information and to identify whoever is handling outstanding payments to other companies.

The most effective debt collection services are tied to robust commercial databases and can quickly scan and provide alternative-billing addresses, thus saving collections teams significant amounts of time and effort. Once the right contact is identified, other services can ensure that communication efforts are opened, read and understood.

Third-party letter notification services can help with customizing notices. Always look for a partner that can provide supplemental and value-added content to your communications. Often, expanding your focus from debt collection to education can help customers understand the ramifications of the collections process and bridge the gap between notification and payment.

Staying shipshape:

An Experian study found that 20 percent of the addresses creditors have on file for debtors are incorrect. Files must be kept up-to-date.

Even the scariest storms at sea eventually clear. It’s a fact that customers who've gone into arrears usually become solvent again at some point in time. By monitoring debtors, credit managers can learn when a customer's ability to pay has improved so the account can be approached again and the unpaid balance collected.

From the logbook:

Experian’s clients report that utilizing a comprehensive collections system that includes a customer education component has improved their returns on average between four to nine percent.

Collections is just another phase of the customer lifecycle. By maximizing debt collection efforts, credit managers will make more profitable decisions.

We always love to know what you’re thinking, so please send us your comments or questions below or send us a message on Twitter @experian_b2b.

For more information about Experian’s advanced business-to-business products and services, please visit www.experian.com/b2b.

Managing the Customer Lifecycle

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