4 Essentials to Increasing Collections with Changing Regulations
This article is taken from our “Increasing Collections with Changing Regulations” Webinar, featuring panelists Mike Bevel, Director of Education for the iA Institute, Mike Gibb, CEO for Canvas Business Media, and Issa Moe, General Counsel and Vice President for ACA International.
The accounts receivable industry is shifting, particularly in its regulations and strategies for engaging clients. You need to learn the new best practices for connecting with clients, increasing collections, and remaining compliant through all of it—and that starts by asking questions like:
- How can you manage compliance with remote workers?
- How can you remain stable after the COVID-19 pandemic?
- How can you engage and communicate with clients to increase collections while remaining compliant?
- How can text messaging fit into your collections strategy?
We’ll help you tackle these concepts so your collections team can take the best path forward for managing debt holders beyond the COVID-19 pandemic.
1. How can you manage compliance with remote workers?
You want your team to have the ability to be remote or hybrid after the covid-19 crisis. But collectors are not easy to manage from home, especially when you consider the extra cybersecurity you’ll have to set up for your collections team.
What all do they need to stay compliant?
For starters, you need to know what specific rules your state has for working remote. Typically, a debt collector in the United States needs to register his or her address as a branch office with state regulators. But several states are temporarily allowing an exception to this requirement in response to COVID-19:
- Oregon (email sent to licensees)
- Massachusetts (email sent to licensees)
- Michigan (not quite as clear, but a memo from Mich. Dept. of Health and Human Services recommends working from home "when feasible")
Learn what due diligence is expected in your individual state, and keep an eye out for changes to avoid legal issues.
Get your workers’ cybersecurity in check.
You also need to make sure your cyber liability insurance is current (it protects you from lost income and covers defense fees your business may be required to pay as a result of a data breach), plus provide your team with virtual private networks (VPNs) to protect your clients’ data.
Consumer privacy is paramount when working remotely, and the Federal Trade Commission is a great resource you can use to check in on regulatory privacy requirements.
Workers can’t take notes or leave credit card numbers laying around in their house. Constantly remind them to keep their work environment private and professional, so their callers don’t hear any outside noise in the background.
It's recommended you don't use personal devices for this work, but if you do, you need to start implementing expectations about how that device is affected by company-wide wipes or system checks.
If they’re using devices provided by your office, make it clear they’re not private to the company and they shouldn’t be used for personal things.
Compliance and consistent regulations have to come first, especially when your team is at home.
What about staying compliant with your own team?
In a typical office setting, you’d be able to provide assistance as needed, but that’s not possible to do from home—which is why live call monitoring is going to be important to make sure everyone is performing how they should.
You can listen to calls in real-time to provide feedback and correct mistakes before they happen, or use the recordings to draw insights and tips for how the collector can improve
Having an internal communications software, like Slack, can also make it easy for teammates to reach you whenever they need as they have issues with calls or questions.
Keep record of your team’s hours with tools like Timely, and make sure they’re monitoring their time spent working and taking breaks. You still need to pay for overtime, and that can be easy to forget when you’re at home.
Set clear hours and expectations (both verbally and written), and follow that up with routine audits to make sure schedules are lining up and employees are incorporating adequate breaks into their workflow.
2. How can you remain stable after the COVID-19 pandemic?
The biggest learning curve that’s come from COVID-19 is how businesses straddle the line between demanding strict compliance with payment terms and remaining flexible with debt holders.
The economy is hurt and some consumers are entering the debt pool for the first time ever because of the coronavirus. There are going to be a ton of new accounts, but many more people who can’t pay them.
It’s a balancing act of maintaining relationships with your clients (so you’re authentically empathetic toward their unique situations) and enforcing contract rights to maintain cash-flow:
- Double check the status of an invoice before you reach out
- Keep your tone polite, but firm
- Directly state your intentions, and don’t beat around the bush
Keep note of what is and isn’t working for your clients in crisis, be open to mitigation, and stay compliant with the rules you’ve already established.
Actively encourage your team to come to each other for guidance. Consumers will pay collectors they like, so stay gracious and accommodating toward their well-being.
Preparedness to remain calm and collaborative is vital for consumer retention—and automating certain steps of your collections process can be one way to help you get through the stressful human part of debt collection.
For example, automatically marking phone numbers or emails that aren't active any more or still require recorded consent to be contacted is a great automation. You also want a clear, automatic way to know when consent has been revoked. (We’ll talk about this more later.)
Leadsquared is just one example of new technologies that can help debt collectors automate tasks.
3. How can you engage and communicate with clients to increase collections while remaining compliant?
There’s a new wave of first-timers who’ve never been in a financial crisis before, and those consumers are going to have many different kinds of communication preferences.
Reaching them the way they prefer is key for engagement.
What preferences do consumers have?
There are plenty of communication channels that the accounts receivable industry have not widely used yet, including text messaging. Some people like to get their payment reminders over the phone, some like to get them as letters. But text is also one of consumers’ on-demand ways to engage with businesses, and you’re missing a lot of money on the table if you’re not using it as a channel.
Each new channel you add will have it’s own risks and compliance rules that you’ll need to address, so don’t rush through adding them to your strategy.
Once a new rule is published about a specific communication channel in the federal register, you have a year to get your outreach strategy aligned to comply.
You’ll also want to work closely with your creditors, so they know how you’re going to use their data and on what channels. There has to be a proven chain of title and accessibility. You want to maintain a healthy list with good data, and creditors need to understand how integral them giving you the right information is in your efforts to successfully use a channel.
Continue to touch base with consumers so you can confirm you’re contacting them with a number or email they actually use. The Consumer Financial Protection Bureau (CFPB) recognizes two different kinds of consumers:
- The affected consumer (the one who owes you money)
- Connected consumer (someone related to the affected consumer who answers the collector’s call)
The connected consumer still has the ability to opt the affected consumer out of communication, so keep that in mind as you update your contact lists.
4. How can text messaging fit into your collections strategy?
You know you’re going to get an increase in collections when 99% of texts are read. In fact, the average response rate to a text message is 40% to 50%!
Compare that to the 20% of people who are willing to answer a call, plus the small 10% of emails that get responses, and it’s clear which channel is going to have the highest chance of reaching consumers and getting results.
But how do you stay compliant?
You can message debt holders if you have their cell number, but we strongly recommend getting a specific opt in first.
You can do this by inviting them to receive payment reminders, account updates, basic questions, or check-ins, which can come in the form of:
1. Getting them to say “yes” to receiving SMS payment reminders over the phone or email.
2. Encouraging them to text you first, so you have permission to text them back.
3. Having them sign a form on your website, that includes a box with the terms, “You can contact me by phone call, SMS, or email using the info I’ve given you.” (Creditors should also consider making this a part of their reporting requirements to help your data lists.)
The Consumer Financial Protection Bureau (CFPB) clarification ruling finally came through in favor of text messaging. So as long as you only text clients for the things you’ve been given permission to text them for, plus offer them a clear way to opt-out if they’d like the messages to stop, you’ll be in the clear.
Text Request automatically includes an “opt-out” message option to help your business stay compliant.
How can your collections strategy change going forward?
Be analytical and question the choices you make. Revisit your hardship policies, and record any operational changes that occur in your businesses. Look at data and see what's working for you, first, and then make changes or check out other successful agencies' case studies for reference.
It also helps to create a roadmap of what you can automate, and how you can properly connect with consumers based on their preferences.
As a final rule, risk management and compliance are the two biggest factors you need to consider as you shift strategies and implement new channels.