Collection Best Practices

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Collection Best Practices

• COHEAO
• Mid-Year Conference
• August 3, 2009
• 215 300 PM

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Todays Panel Presentation

• John Adonnino NCO
• How to leverage technology!
• Karen Reddick NCM  
• Back to the basics in Collecting!
• Bill Cantalope ERS                      
• Incentives Culture Changes!

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How to Leverage Technology

• Times Have Changed
• Account Segmentation
• Scrubbing, Scoring Segmentation Value
• IVR (Interactive Voice Response)
• Productivity Measures

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Times Have Changed

• Agencies have always utilized automation
  technology.
• More critical now, than ever, in todays
  challenging economic climate is to utilize and
  leverage all types of automation and technology
  to meet four goals

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Four goals!

• Perform Competitively
• Remain Compliant
• Operate Efficiently
• Increase Profitability

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Account Segmentation

• Segmentation Proprietary automated tool that
  leverages
• internal and external (credit bureau and public
  records) data
• to help predict account repayment probability
  with a high degree
• of accuracy.
• Objective - Accounts are sub-grouped based on
  expected
• recovery rate or unit yield.
• Segment Treatment Operations management applies
  the
• optimal treatment for each value segment.
• Remain in compliance with clients work
  standards.

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Examples of Sub-Groups in a Segmentation Model

• High Value
• Medium High Value
• Medium Low Value
• Low Value

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Scrubbing, Scoring Segmentation Value

• Integrated into new business load process
• Credit Bureau Scores Attributes
• Bankruptcy and Deceased Accounts
• Provides Detailed Skip Information
• Cell Phone Identification
• Preparing for global cell phone purge
• Currently, flagging and usage determined by client

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IVR

• Technology that allows a computer to detect voice
  and keypad inputs.
• Objective Increase borrower reach. Campaigns
  and message content are centrally controlled and
  consistent to ensure regulatory compliance.
• Current Usage IVR technology used as both an
  auto-message platform, as well as a method to
  drive authenticated right party contacts to
  collectors, enabling our staff to be more
  efficient and productive.

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Productivity Measures

• Employee Metrics
• Objective Improve financial performance by
  tracking agent level productivity, improving
  accountability and identifying areas of
  opportunities for re-training. Initial focus on
  efficiency (occupancy) and effectiveness (dollars
  collected).

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Productivity Measures

• Key Performance Indicator (KPI) Reports
• Objective - The KPI report allows monthly
  performance tracking by client and segment.
• Operations Managers can make treatment
  adjustments by each segment as needed.
• Analysts can monitor the performance of
  segmentation models and adjust / redevelop as
  needed.

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ADDITIONAL PANEL REMARKS
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BACK TO THE BASICS

• CHANGES IN TODAYS BUSINESS OFFICE
• Failing Economy
• Freeze in the Credit Market
• Decrease in Budget/Resources
• Decrease in Staff
• Restricting Regulations

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BACK TO THE BASICS

• THE EFFECTS OF THESE CHANGES
• Increase in AR bad debt
• Increase in Bankruptcies
• Less Consolidations
• Increase in Cohort Default Rates
• Less Perkins to loan out
• More to do, less to do it with

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BACK TO THE BASICS

• STRATEGIES
• Working Smarter Instead of Harder
• Utilizing Technology
• Working closer to FA Office
• FAFSA
• Forecasting
• Clear and Concise Disclosures
• Payment Agreements
• Financial Agreements
• Continue the Consolidation Pipeline-William D.
  Ford
• Look at rehabilitations
• Pro Allows borrowers to continue
  demonstrating ability to pay
• Con Borrowers expectation in getting out of
  default

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BACK TO THE BASICS

• STRATEGIES CONTINUED
• Cash Collections
• Is payment in full gone
• Loss of home equity loans and open line of credit
• Flexible payment plans due to current economic
  conditions
• Utilizing 3rd Party Servicers More
• Send accounts out in a more timely manner
• More Resources
• Experts in Negotiating
• Consolidation Gurus
• Unique Skip Tracing Techniques/Skills
• Credit Bureau Reporting
• Utilize your billing servicers for AR Collections
  and other institutional funds

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BACK TO THE BASICS

• STRATEGY CONSIDERATIONS
• Internal collections
• More Due Diligence
• More Follow Up On Broken Promises
• More payment arrangements
• Reporting to CB
• Internal skip tracing

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BACK TO THE BASICS

• STRATEGY CONSIDERATIONS
• Collection Agencies
• Using more than one agency
• How to find the right agency for your institution
• Higher Education Experience
• Bonding/Insurance
• Licensing
• Audits
• Customer Service
• Technology
• Education
• Recovery
• RFPS
• Pricing
• Tracking Stats

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BACK TO THE BASICS

• COLLECTIONS AGENCIES DOING MORE WITH LESS
• Competition and Set Pricing has forced agencies
  to develop techniques that provide better results
  using less time, manpower and expenses.
• We are able to handle more business with less
  employees due to the technology changes in our
  industry, we are able to do this without
  jeopardizing results.

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ADDITIONAL PANEL REMARKS
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Incentives Cultural Changes

• Todays Collectors vs. Yesterdays
• It seems as the old saying goes, what goes around
  comes around!
• With the changes in our industry over the last
  three years collectors of Today are using the
  collectors of Yesterdays techniques
• Payer Trays Financial Statements
• Large Down Payments Monthly Payments
• More Family Involvement

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Incentives Cultural Changes

• Alignment of goals
• Understanding Clients Goals and Objectives and
  how to incent Collectors to achieve the Goals.
• Collector Incentive Plan.
• Collection Manager Incentive Plan.
• Non-Collector and Non-Collector Incentive Plan.
• Senior Manager Incentive Plan.

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Incentives Cultural Changes

• Rewarding without Pay
• Physical Environment Awareness of a job well
  done Collector Recognition.
• Total Quality Management Team Work
• Company Newsletter Recognitions
• Informing Clients of Performance
• Daily, Weekly, Monthly Contests
• Weekly Lunches or Pot Lucks
• Use your imagination!

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Incentives Cultural Changes

• Compensation and Motivation
• WIIFM or WIIFThem
• Pay Attention to the people that have the
  greatest impact on productivity. Following-up on
  results is the 1 motivator of people!
• Share bonuses, incentivize reaching goals. Money
  is the best motivator!
• Less hourly wages, more commission!
• Employees are cash driven! They also like to be
  rewarded with Paid Time OFF!

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Incentives Cultural Changes

• Hiring Practices with all of the layoffs our
  pool of applicants has changed. More Educated.
• Security and Background Checks very costly but
  a must, not only to protect customers but also
  fellow employees!
• Contract Specific Training more demanding
• Scope of Business understanding what the
  clients want, we are seeing different business
  lines, A/R Private Loans State Loan Programs
  etc.

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Incentives Cultural Changes

• Collection Techniques Collection Systems
• Calling Strategies ( Dialers, Texting, E-mails,)
• Scoring Models
• Skip Tracing Techniques Facebook MySpace
  just a few examples.

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ADDITIONAL PANEL REMARKS
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QUESTIONS ANSWERS

• AUDIENCE IDEAS
• PARTICIPATION

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EMAIL CONTACT INFORMATION

• JOHN ADINNINO john.adonnino_at_ncogroup.com
• KAREN REDDICK
• kreddick_at_ncmstl.com
• BILL CANTALOPE
• bcantalope_at_ersinc.com
• CARL PERRY cperry_at_progressivefinancial
  .com
• THANK YOU FOR YOUR ATTENTION!