What is a Modern Collection Agency Model and How is it Different from Traditional Practices?

The modern collection agency model is a new way of collecting debt that is changing the traditional practices of collection agencies.

This model focuses on improving the customer experience, streamlining operations, and leveraging digital collections to increase revenue.

Although the traditional methods were effective for many years, the new model is making the process more efficient and effective for both the collector and the consumer. This article will discuss how this modern collection agency model is gaining popularity, and how it can benefit all parties involved in debt collection.

The Benefits of a Modern Collection Agency

The modern collection agency model is quickly becoming the preferred choice for businesses looking to collect on unpaid debts. Automated collections and digital debt collection services offer a convenient, cost-effective way to manage accounts receivable without the challenges of managing a large staff. Virtual collection agents are increasing in popularity as well, and since they can handle many times the number of calls as a human agent, they are quickly becoming a vital part of the debt collection process in modern society.

With virtual collection agency models, businesses can quickly and easily collect on debts without having to hire staff or invest in expensive software. Online debt collections also provide a secure way to protect customer data while ensuring that all payments are collected in a timely manner.

More and more businesses are increasingly turning to modern collection agencies for their debt collection needs. Automated collections and digital debt collection services are becoming more popular, as they meet the consumer where the consumer wants to be met. This leads to greater trust in the agents and the agency, and a higher overall resolution rate.

I see it more as a supplement to our human workforce instead of a replacement for them. Machines can do the same job as humans but without error, without complaint, and without rest.

At this point, however, our technology has not caught up to the nuanced skills required by our best human agents. It still requires a gentle, human touch to determine what the consumer’s true complaint is, and how best to resolve it.

This means that while you will not be able (or expected) to fully replace your workforce with an army of bots, you should be prepared to incorporate them as part of your operations model going forward.

A true AI chat bot, when integrated with your collection software, can handle at least 80-90% of the routine calls your agents can handle. Then, you can still have human agents, but they will be specialists trained in resolving the most complex and challenging inquiries or account issues. The bot will handle the routine inquiries with speed and accuracy unlike anything your staff could muster, while your staff become specialists and learn how to resolve highly complex situations.

This is the direction of the collections industry.

Whether we like it or not, AI is revolutionizing the debt collection industry. AI-driven collections are more efficient, cost-effective and accurate than manual, human-driven processes. They can help collect debts faster, reduce operational costs and improve customer experience, so why wouldn’t you want to leverage that power?

AI collectors can automate the easier, mundane tasks like data entry and document processing, freeing up human resources for more complex tasks like customer interaction and dispute resolution. AI also helps in reducing false positives by accurately identifying customers who are likely to pay their accounts.

AI & automation in debt collections can help agencies save time and money while improving customer satisfaction.

How Data Analytics Can Help in Streamlining Collection Agency Practices

Collection agencies are, among other things, data-generating machines. All day long, they collect data, analyze data, create data, and react to data. For the wisest, most profitable agencies among us, data analytics has become an essential tool for streamlining internal practices.

With predictive analytics, debt collectors can anticipate customer behavior and make better decisions regarding credit & collections management. This helps them to improve their efficiency and reduce the time spent on manual processes.

Data analytics also helps in identifying potential risks that may arise from customers’ financial behaviors, enabling the collection agencies to take appropriate actions in advance. By leveraging data analytics, collection agencies can be more effective in recovering debts while providing a better customer experience.

Perhaps most simply, just gathering and reviewing your own agency’s data at the highest level can yield quick and actionable insights. Whether you start by looking at your agent data, contact data, or client data, we recommend starting with whichever data set is easiest for you to access.

Start there, look at what you’ve got, and look for patterns. If you’re feeling overwhelmed with this process, you could consider retaining the services of a Data Analyst who can help you figure out where you are, where you’re going, and how you’ll get there.

The Impact of Automation & Robotics on Collection Agencies & Their Performance

Every agency owner has individual goals for their agency, yet they all share a singular goal in common:

Increase revenue while reducing expenses.

In a modern collections environment, we’re seeing automation and robotics transforming the way collection agencies do business. With robotic process automation, collection agencies can automate many of their tedious manual tasks to increase efficiency and reduce costs.

Automation and robotics allow modern agencies to become more efficient and effective in their operations, making the entire agency more profitable as a whole.

Have you started exploring automation in your agency operations yet?  If not, check out our page on OnePoint for Collections, our all-in-one collection agency solution.

Conclusion: Leveraging the Benefits of Modern Collection Agency Operations

The benefits to moderinizing your operations are vast; expect to increase revenue while decreasing costs.

For the agency owners who are not convinced that technology is the wave of the future, for those who feel like the way they’ve always done it is just fine, and for those who are left in the dark in an ever-increasing world of technology: buckle up. It will be a bumpy ride. You can make it through this on your own, but it will take gumption, creativity, and thinking outside the box.

For the agency owners who are bold, and unafraid to try new things, here is our advice:

Technology will be your greatest ally. Find yourself an expert who understands both the nuances of the collection industry as well as the rapid growth of automations and technology. Partner with that agency and don’t let go; you will look back and realize the value in a very short period of time.

If you’re looking for a technology expert with distinguished collection agency experience, you’ve come to the right place. Isaac Asher, founder of Clear Sky Technologies LLC, has over 27 years of working in collection agencies across the nation. He has experience working in every position there is to have in a collection agency, and can see the bigger picture. Combining his collection experience with his love for technology, he most enjoys helping collection agency owners increase their profitability and reap all the benefits of modernization.

Book an appointment with Isaac today to talk about the challenges in your agency and how best to address them.