7 Major Operational Challenges Faced by Debt Collection Agencies
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Debt collection agencies are operational to support the collection jobs of banks, nonbanking financial companies, private finance companies, and more. There is a procedural approach followed by these collection agencies to run different campaigns and increase collection or identify defaulters for their clients. Usually, the whole collection business works on an outsourcing model, in which the companies or organizations like banks, small finance banks, etc. outsource all data to collection companies to run campaigns and try to increase the payment of EMIs.
Collection companies use the best NBFC software, payment utility for collection, CRM system, and other tools to stay tight on the collection and increase recovery of payment. Still, due to several driving factors, these collection agencies face different challenges. In this blog post, we will discuss the top operational challenges in NBFC or collection companies that can cause hurdles in the collection process.
1. Insufficient customer data
Collection agencies don’t just call customers randomly or in a round robin fashion using a call center solution for collection agencies to pay EMI, but they actually put in smart work along with hard work to define collection campaigns. They segment customers into different groups based on different criteria. This group is often referred to as buckets. The collection campaigns get executed depending on buckets, which would have personalized call scripts, specifically chosen auto dialer, and several other features. When a collection campaign is executed based on data, collection companies and NBFCs can reap better results. However, one of the major challenges faced by these companies is that customer data is either not passed completely or partially. That means customer payment history, CIBIL score, credit report, etc. might be missing and that can cause challenges in running collection campaigns even if the business uses the best call center software.
2. Inefficient process of collection
To increase EMI recovery, the collection companies have to focus on the right approach and define processes for that. For example, customers get classified based on their payment history. This is one criterion. There can be multiple criteria to classify clients and put them into buckets. Payment utility for collection helps in defining these criteria to classify customers and put them in different buckets. However, in some collection agencies, the operational challenges in NBFC and collection agencies arise because there is a well defined process. They simply run collection campaigns and give reminders to customers to pay EMIs. This does not reap any real results.
3. Disjoined system of collection
To run collection campaigns and increase debt collection, NBFCs or collection companies need to have a streamlined system between the organizations for which collection campaigns are executed and the collection agency. Often this sync is missing, which results in various challenges. The use of NBFC software and a call center solution for collection agencies may also not rescue if the system is disjointed. Here is an example, if an NBFC uses a local CRM system and a collection company uses a payment utility for collection along with the call center software, then that CRM system must be integrated with this system. This will ensure any change in the CRM system will be reflected in the database of the collection software as well. This will give an accurate copy of the information to let the collection company work more efficiently. In another case, disjoined operations would result in higher operational challenges in NBFC and even inefficient operations as well.
4. Lack of advanced tools
Collection campaigns are not standard outbound or inbound campaigns. They are specifically designed campaigns that need to be executed based on different strategies to actually recover more money from customers. Thus, along with skilled and experienced collection agents, field teams, and management, collection companies need to use advanced tools such as NBFC software, a call center solution for collection agencies, collection module for NBFC, and similar advanced tools. Using an ordinary call center software solution without any advanced features or modules, collection agencies cannot work efficiently. It also causes operational challenges.
5. Too many or too less calls
Another major operational challenge faced is customers don’t pick up calls from collection companies or mark the number as SPAM, which leads other customers to not pick up the call from that specific number of a collection agency. This happens because sometimes collections agencies run frequent campaigns and give too many calls and reminders to clients to pay the due EMIs.
On the other hand, some collection companies run less frequent collection campaigns. This can result in fewer reminder calls, which often get neglected by the customers.
These issues are user generated, but still, it causes several challenges and reduces the recovery of EMI.
6. Lack of training in agents
Collection campaigns are specifically designed campaigns and have a very crucial role to play. Thus, using the right tools such as NBFC software, call center software for NBFCs and banks with collection features, payment utility for collection, etc. is necessary. Similarly, using skillful agents that have experience in dealing with collection campaigns is necessary. They must also know how to use these software and tools to operate more efficiently. Thus, collection companies running these types of campaigns need to focus on training agents to handle these campaigns more efficiently. Even if a collection agency has experienced agents, it is worthwhile and recommended to provide personalized training to agents. Each collection agency must explain how their system works, how their software operates, the strategy they work upon, the major KPIs and goals to target, and all other information. This helps agents to work more productively and efficiently. However, a majority of collection agencies simply give call scripts and ask agents to work. This causes inconsistency in operations and causes operational challenges as well.
7. Contacting the wrong people
One of the golden rules in any call center is to focus on the right people. In collection companies and NBFCs, it is even more vital. For example, if collection companies keep on contacting customers that have already paid EMIs, then this is not only a waste of time, but it also irritates customers. Also, if customers are paying EMIs on time, then there is no meaning to give multiple reminders. In a nutshell, contacting the wrong people and customers can result in increasing challenges.
Running a collection agency or campaigns for increasing collection is itself a challenging job. This is the reason companies use exclusively developed call center software, NBFC software, and other tools. However, using the right tools is not enough to tackle operational challenges in NBFC. It is necessary to identify major challenges in a company while running collection campaigns and resolve them with the right tools and strategy to increase returns like increasing recovery of EMIs, reducing nonperforming assets, promoting better performing assets, and more.
In this article, we have shared seven major challenges that debt collection agencies of NBFCs often face. We have also shared the top tips and recommendations that any collection agency can follow to manage its campaign more effectively.
If you are interested in getting the best call center software, NBFC software, or any other module related to the collection for the collection center, then we can help with our technology solution. We have developed multiple solutions for collection companies and NBFCs, including, DialShree: Omnichannel Contact Center Solution. Get In Touch With Us to know more about our software and book a free demo.