debt collection software

Debt Collection Agency

Debt Collection

How Debt Collection Agencies Work

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Third-Party
Collectors

DCA’s recover overdue or defaulted debt for companies who were unable to collect it themselves. They deal with all kinds of debt, from credit cards to utility bills.

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Collections for
a Percentage

The collection agency can take a percentage of the debt recovered as payment for their efforts. They also negotiate settlement plans with debtors.

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Debt
Buyers

Alternatively, the agency can buy the debt for a low amount and then keep the full amount they manage to recover.

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What is the Debt Collection Process?

When a debt had been passed to a debt collection agency, it is first assessed and the details verified. Next, initial contact is made with the customer, for example, a demand letter is sent.

Within 30 days of no response, the DCA will again contact the debtor through various channels like SMS, WhatsApp, email or phone. They will try to find out why the debt is not being paid and if they can come to an agreement with a payment plan or another arrangement.

If the customer does not respond, the DCA will send an ultimatum notice. And if all efforts to help the debtor meet their payments are futile, the collection agency is within its rights to take the matter further and start with legal action.

Debt Collection Process
Debt Collection agency software

How Debt Collection Agency Software Helps DCA’s Work Better

Over the last few years, debt collection agency software has advanced to become highly automated with using a blended approach of AI chatbots and live agents. This allows the debt collection agents to deal with multiple conversations at the same time, and while the collections chatbots are handling basic tasks, the agents can deal with more complex issues.

As the AI chatbots learn (using Machine Learning), they can provide over 70% automation of customer conversations. So, where once an agent was closing 50-70 conversations a day, they can now close 380-420.

Additionally, API integration provides real-time data on-hand to the agents and connections with third party solutions like payment gateways.

Why Conversational AI is the Key to Debt Collection Success

Older versions of chatbots used simple keywords and decision-trees to try interact with people. These tended to be cold and demanding: “Pay Now”, “Click Here”, “Yes or No”.

Nowadays, conversational AI technology has grown to the point where an AI chatbot can have a two-way dialogue with a customer that is natural-sounding and helpful. People respond better to this more empathetic tone than one-way commands.

Using Natural Language Understanding and Machine Learning, the AI chatbots can predict the outcome of a conversation with intent recognition and also pick up if a customer is vulnerable. It will then guide the conversation down the best route. The conversational AI tech can also gather entities, such as dates, from out of the live conversation and use them as needed.

What is Debt Collection conversational AI

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Customer Connections

The new conversation rules for Credit, Collections and Payments

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vulnerable customers in debt

DCA's Dealing Fairly with Vulnerable Customers

People sometimes land in financial difficulty due to ill health, job loss or circumstances beyond their control, as in the case of the Covid-19 fallout. Companies need to detect vulnerability in a customer and then respond with the appropriate level of understanding.

Organisations need to treat vulnerable clients fairly and try to help them resolve their financial predicaments, and in doing so, the companies themselves are more likely to have a positive outcome.

The Financial Conduct Authority in the UK (FCA) has published a guide for firms on the fair treatment of vulnerable customers. With the cost-of-living crisis pushing people into financial stress, the FCA is making every effort to help both companies and customers through the debt collection journey.

What Debt Collection Agencies Can
And Cannot Do

Collection agencies are obliged to follow the regulations governing debt collection activities. These are put in place to protect customers from being abused and they also include fair processes that allow companies to recover what’s owing to them.

Below are a few examples of DCA behaviour that is not allowed but read here for a more comprehensive look at debt collection regulations.

  • Creditors cannot speak to anyone else about your debt.
  • DCA’s cannot threaten or harass you.
  • They cannot pretend to have legal enforcement powers they do not have.
  • Collection agencies can only contact you at certain times, e.g. between 8:00 – 21:00.

debt collection agency cannot do

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