We are witnessing the biggest transformation of the debt collection industry. Currently, it has reached the fundamental question between survival or extinction.
The turning point is here. What is changing debt collection?
Megatrends of digitisation and automation
Handling purchase invoices has been digitalised for many years. Whereas companies have applied modern technology to Accounts Payable - Accounts Receivable process is still in many ways manual and scattered between different players. But the change is under its way.
It is inevitable that digitalisation and automation will also cover the entire A/R process from credit risk evaluation to debt recovery.
Massive automation, including use of robotics (RPA) for invoicing, payment reminders, collection, and reconciliation takes place as we speak.
Why should debt collection agencies pay attention?
Digitalisation and automating manual tasks within the existing business concept are of course relevant for collection agencies to streamline operations and find cost savings in order to offer better price and higher quality.
However, there is a much more relevant aspect, which the debt collection firms should pay attention to.
The traditional way of outsourcing debt collection to an external service provider is based on the fact that client companies do not have systems to support the collection process themselves and that the collection process is too time-consuming and expensive to handle in house. Also, legal collection may require external resources.
For decades, specialisation and excellency in debt collection has been enough to bring customers and new cases in.
Now, market shares are being taken over by new players.
When it comes to the volumes of the business, now collection agencies need to be more alert than ever before – otherwise they jeopardise the crucial, constant flow of debt cases in volumes.
The outsourcing of fresh overdue debt collection in large volumes will cease.
This will be the natural outcome of client companies investing in A/R software:
- A/R software will store the A/R data for all
- It is worth noting that there is easy-to-use software for Payment Reminder
- Automation will lower remarkably the cost for in-house collection
Account Receivables are being consolidated into one value chain at an accelerating pace.
Accounts Receivable – all the way until collection – will be dominated by platform software that handles all processes and case data seamlessly within the same platform.
Accounts Receivables value chain is being disrupted
The key for getting to handle delinquent customers’ cases today is not about collection efficiency alone, but more importantly whether the collection provider has access to customer data already at early stages of the cash-flow management process.
The earlier in the credit management process the debt collection agency is providing value added with smart Payment Reminder, the bigger the likelihood to be able to take over the customer data.
How early in the A/R value chain are you able to tie up your customer to your process?
Download the Survival Strategy Guide 2022
Know about the mega-trends disrupting the payment collections industry currently and learn the survival tactics to stay ahead of the game!