Blog & Insights
Debt Collection Software — Your Questions Answered
What is debt collection software, who uses it, and how does it work? In this blog article, we’ll answer some of the common questions on this topic.
What is debt collection software?
Debt collection software is used by both third-party collection agencies and first-party lenders to pursue payments on delinquent debt. This type of software provides the tools necessary to streamline workflows and allow for more efficient and effective consumer outreach. The end goal is to bring accounts to resolution and collect payments more quickly.
What’s the difference between first-party and third-party collections?
When referring to first-party collections, it is typically the original creditor who is attempting to collect upon the debt. For the debtor, it’s usually the original contractual relationship with a company. Banks who lend money for mortgages, auto loans, student loans, etc. or utility companies, department stores, credit card companies, etc.
At the point when an original lender decides they do not have sufficient resources (staff and/or debt collection software technology) to collect upon the owed debt, many will outsource to a third-party collections’ agency. At this point, the original creditor contracts with a third-party agency who will attempt to collect the debt on their behalf in exchange for a certain percentage of the amount they are able to acquire.
How does debt collection software work?
Essentially, a debt collection software solution serves as a centralized platform where organizations manage their account portfolios and collections activities.
Data-driven workflows are implemented to optimize campaign strategies and prioritize accounts for the collections agents, also often referred to as account representatives, who are working them.
Key functionality includes:
- Automated workflow
- Built-in compliance safeguards
- AI Machine Learning for improved outreach
- Omnichannel communication and self-service channels
- Embedded payment processing
Why is automation important?
Time is of the essence when it comes to collecting past-due payments, so it is critical that agents are working as efficiently as possible. The more manual the processes are, the more time it will take agents to work accounts, and the longer it will take to recover money that is owed.
How do you automate your accounts receivables process?
An ideal debt collection software solution automates and streamlines workflow by infusing intelligence into processes to increase efficiency.
Software solution providers use robotic process automation (RPA) technology in their platforms to perform manual and repetitive human activities. By freeing agents of these redundant and often time-consuming tasks, they are able to focus on working accounts that require human intervention.
Additionally, the use of explainable AI helps to prioritize accounts with the highest potential yield. Advanced segmentation tools use machine learning and propensity to pay algorithms to help zero in on the consumers most likely to pay. These tools allow agents to work at the top of their license, and as efficiently as possible.
What is digital debt collection?
Consumers and businesses have become increasingly aware of the conveniences and opportunities that digital services can provide. And while the shift in digital technology was fully underway well before 2020, the pandemic certainly accelerated the pace — and necessity — of both understanding today’s digital consumer, and adopting digital tech.
These digital technologies make it easier to reach consumers on their terms — via their preferred channel (text, email, etc.) — and also collect payments online. Omnichannel engagement tools and self-service channels are built into debt collection software to increase the likelihood of contact and speed of payments. This ends up in a win/win situation for both collections staff and the consumer.
Are you interested in a debt collection software solution?
Finvi’s solutions help organizations, including agencies big and small, drive better results through digital consumer engagement, workflow automation, explainable AI and embedded compliance guardrails. If you’re interested in learning more, click the link below: