Jan./Feb. 2010

Client Access Propels First-Party Collections

By T. Steel Rose and Cindy Pickett

Minnesota is home to arguably the best fishing in the country. It also is home to superb leaders in accounts receivable. This issue, all the members of our stellar round table are based in Minnesota. We always wanted to learn more about Jim Christensen, CEO of Array Services Group in Sartell, MN. With 40 years of industry experience, Jim has seen his business grow from Central Collection Service with three employees and five clients to a family of companies that service more than 500 clients and 400 employees. He joins another industry veteran, Joel Lewis, vice president of Convergys in Minneapolis, MN, whose collection industry roles range from the mail room to leadership positions with operational, sales and strategic responsibilities. IC System, Inc., located in St. Paul, MN, provided input on pre-charge-off credit card collection from lead collectors Dane Breimhorst and Breanna Villella, and collection representative Maria Ferreira Roy.

Collection Advisor: Tell about something special you or your company has done to resolve a pre-charge-off debt.

Jim Christensen: Our proven formula recognizes that the single most efficient feature of a successful pre-charge-off program is implementing representative-level system training and access into the client's host system. This allows us to be a transparent extension of our client's business office, provides one-call resolution with a desirable consumer experience and minimizes pre-charge write-offs.

Maria Ferreira Roy: I handle many high-balance accounts. Recently, I worked with a self-employed man with a $28,000 credit card balance. After thoroughly reviewing his financial situation and working with him and the client, I was able to arrange an amicable settlement.

Joel Lewis: In working with our client, we developed a "win back" program for pre-charge-off customers. For example, in the wireless industry, we can use analytics and customers' previous payment histories to determine good candidates for reconnect. If they give us a credit card that doesn't expire for 12 months, they would be offered a reconnect. Proactive reminders can be sent to their mobile device to help them stay on track with future payments.

Collection Advisor: How do pre-charge-off collections differ from debt collection for other industries, such as healthcare or mortgages?

Jim Christensen: The difference is the product we offer. Our main point of difference is the "customer-first-service" mandate on every call. The calls need to look and feel as though they are coming from the original creditor's office/agents. We truly mirror our client's internal expectations through this model.
Success in the market combines a client-centric approach with the speed of technology. Our approach to pre-charge-off collection requires diplomacy and sensitive customer service because we are acting in the name of our client. Compliance to all regulatory requirements within each industry is a challenge and requires extra steps, including recording all calls as standard operating procedures.

Dane Breimhorst: The biggest difference with pre-charge-off debt is that the individuals we are working with might still be our client's active customers. You need to understand customer service and be skilled at being assertive while handling a delicate situation. Most consumers are fairly new to collections and need a knowledgeable representative to walk them through the process.

Maria Ferreira Roy: Collecting pre-charge-off debt is different from mortgage and healthcare collection because it's not secured debt. If you don't make your house payment, you lose your house; if you don't pay your credit card payment, you lose use of the card.

Breanna Villella: Collecting credit card debt is more difficult. Cardholders tend to want to take care of the mortgage bill first.

Joel Lewis: Pre-charge-off activity exists in all types of receivables; albeit different goals and objectives are desired for healthcare, mortgage accounts, etc. The strategies and tools that once focused on financial services are now widely used on all receivable types.

Collection Advisor: What kind of technology/software does your company use?

Jim Christensen: We use three dialers — Artiva, Siemens (SER) and Mercury. In addition, we have two digital recording systems (one integrated and one stand-alone), two collection systems, text-to-speech technology, Avaya PBX, and CMS inbound call routing. We also are interactive in real-time on more than 20 different client host systems, including EPIC, S.M.S., HBOC, CareMedic and Medical Manager.

Dane Breimhorst: We use a comprehensive, easy-to-use collection system called ICE (Intelligent Collections Engine) that was developed internally.

Breanna Villella: We use an IVR system, which allows the cardholder to make payments over the phone without having to speak with a representative. Our Dialer Accelerator software enables us to speak with more right-party contacts, and our Auto Messenger allows us to leave messages that create more inbound calls.

Joel Lewis: Convergys has a suite of proprietary solutions to provide customized solutions for each of our customers. We use relationship management technologies driven by analytics and real-time decisioning that help companies interact with customers how and when they prefer.

Collection Advisor: How has technology impacted your business and enabled your customers to more easily access your services?

Jim Christensen: Technology has been a critical part of our business and is what sets us apart from our client's internal processes. As ease of use and security have improved, our ability to be a complete outsourcing partner is made possible by being transparent with our client's customer base. We have real-time access to client data, so we can update it in real-time. This has saved countless hours of programming time for our clients and greatly improved service to their patients. The transparency of our solution allows the client and us to see what is being done on specific accounts.

Dane Breimhorst: ICE enables collectors to minimize keystrokes, thereby improving efficiency and increasing collections. The system also helps our analysts develop calling strategies. IVR and the Internet have become increasingly important to collections, as debtors have more payment options available and the ability to pay without having to speak with a collector.

Breanna Villella: We use voice broadcasting software to leave messages, so collectors are available to speak with more cardholders. Our online payment site has recovered more than $20 million for debtors who don't need or want to speak with a representative.

Maria Ferreira Roy: Technology gives us the ability to more easily and quickly locate and contact more consumers. Technology also has made it easier for clients to contact us and to audit our activities and their accounts.

Joel Lewis: Improvements in technology continue to advance our business. By using analytics, we are able to design treatment strategies that make us smarter about how and when to contact consumers, thereby reducing delinquencies. Many consumers are seeking self-service options to communicate and resolve their own issues. IVRs, Web portals and SMS text are popular today, and undoubtedly, technology will continue to evolve to provide new communication opportunities.Our company provides customer relationship management solutions, including customer acquisition, care, intelligent automation and notification, and collections.Convergys has built a redundant network that allows our customers the security and flexibility to work with us anywhere, reducing the risk associated with natural disasters and other incidents that can impact the flow of business.

Collection Advisor: What trends are you seeing in pre-charge-off collections?

Jim Christensen: A couple of trends are taking shape in pre-charge-off recovery management. Healthcare is catching up to the rest of the world in the way it is embracing third party outsourcing opportunities — in particular with self-pay receivables. More emphasis is being placed on training and education of our client's internal staff so they have a better understanding of their responsibilities. These efforts have resulted in much better financial recoveries.
With sustained levels of unemployment and decreasing availability of credit, Americans are struggling to keep current with their obligations, so more and more clients find their receivables continuing to increase. Remaining competitive in any business in the current economy will depend on strong credit policies and sound receivables management practices.

Dane Breimhorst: Consumers are seeing how credit scores are used and therefore, are more interested in improving their scores.
 
Breanna Villella: I'm seeing more first-time cardholders experiencing hardships as well as more first-time defaults.

Maria Ferriera Roy: Debtors want to stretch payments over a longer period of time. Or, if they are able to consolidate, they want to settle for less than the amount owed.

Joel Lewis: We have to appeal to the preferred communication channel of the delinquent customer to maximize effectiveness while minimizing the expense.

Collection Advisor: What do you see as the outlook for pre-charge-off collections?

Jim Christensen: The outlook includes continued emphasis on training and opportunities for assisting facilities in maximizing dollars by increasing activity analysis. I see increased cost-competition driving quicker and more effective follow-up as well as further expansion as facilities try to cut costs and increase focus on core competencies. Growth opportunities exist for outsourcing if technology investments are made.

Dane Breimhorst: The industry will continue to focus on pre-charge-off debt because it is better for our clients and the nation's economic health.

Breanna Villella: I think this segment of the industry will grow due to the number of cardholders experiencing hardships for the first time.

Maria Ferreira Roy: I think the outlook for pre-charge-off collections is positive because credit is very important and great programs are available to help people resolve their debts and re-establish their credit.

Joel Lewis: I think pre-charge-off collections will continue to evolve. Most clients are carefully acquiring customers with clear plans on how and when they will collect from each one. The process continues to begin earlier, with more creative communication channels and messages. The use of analytics and technology will increase dramatically in providing self-service payment tools. SMS text and other self-service preferences, including social media, continue to grow with the aging of the Millennials. It will be up to us to figure out how to incorporate their preferred methods of communication into the process.