Tagged in first party outsourcing


Things I Wish I’d Known about Working with a Collection Agency When I Used One

August 1, 2018


Having spent more than a decade in the insurance industry, I learned a lot as a Billing and Collections professional: how to get money in the door, how to manage vendor relationships, and how to preserve relationships with customers even when they go delinquent. Now that I’m on the other side of things working for a collection agency, it’s my job to help my insurance clients get the most out of their collections partners and maximize their efforts. And there are some things I wish I had known about working with collection agencies when I was a Billings and Collections Manager:

  1. Lean on your vendor to be more proactive

Or more simply: you don’t know what you don’t know, and so you should expect your collection agency to help educate you and make suggestions for process improvement. Your collection agency should provide extensive reporting at both the macro and granular levels, giving you a comprehensive understanding of your portfolio.

Since they’re seeing your receivables farther down the line than your team, there’s a great chance they may be able to pinpoint specific trends or offer ideas to increase collection results. This information can be especially helpful to other parts of your organization, such as your underwriting team or your operations department. It can inform new customer outreach initiatives or identify common obstacles that are making it harder for your customers to pay on time.

  1. Always work with a champion – and a challenger

In my years in the industry, I frequently saw insurance companies use only one agency to collect. When an account would go past due, the company would bundle their accounts, send them over to their single-source agency, and hope for a positive resolution. The problem is that some agencies need to be motivated to achieve the returns you want.

To really get the most out of your receivables, consider a champion-challenger model. The champion-challenger approach compares two or more agencies in order to promote the one that performs best. Typically, these comparisons are done on a quarterly or semi-annual basis, and the top-scoring agency is awarded a larger percentage of the portfolio for the next evaluation period. A great collection agency will be driven to out-perform their competition and do what it takes to retain your business.

  1. Consider a first-party solution

Have you considered outsourcing your first-party collection efforts? In a first-party environment, your collection agency acts on your behalf, contacting your customers before their policy goes into cancellation. The primary goal of a first-party program is to preserve the relationship your customers have with you.

The account specialists contacting your policy holders are brand representatives for your company, contacting in your name and helping customers catch up on their premiums before they fall farther behind. This approach not only helps reduce customer loss, but it can also be a valuable source of data to help shape future strategies. The account specialists can gather information about why your customers aren’t paying on time and provide insight into the factors that may be driving delinquency, in addition to getting payment in-hand.

In the end, your level of success directly corresponds to how effectively you manage your partnerships with your collection agencies. Know their relative strengths and weaknesses. Build yourself a winning hand that will maximize results while strengthening those critical customer relationships that serve as a barometer of your company’s value in a challenging marketplace.


Featured Image: Shutterstock/ImageFlow

March A/R Madness: Solving Accounts Receivable Issues with First Party Outsourcing

March 12, 2018


March Madness kicks off Tuesday (Go, Musketeers!), and to make it to the finals, it takes years of experience and dedication, a whole lot of strategic planning and teamwork, and of course sweat equity. Solving accounts receivable issues is no different. If you want to sweat a little less over your receivables, first party outsourcing is a great option to stop the madness. Here’s five big ways first party outsourcing can help solve accounts receivable issues for your business, letting you go back to focusing on what you and your business do best.

  1. Early intervention for early-stage delinquencies

When accounts start to go past due, too many companies look ahead to third part collections—but many times that hand off doesn’t happen until 90 or even 120 days have passed. Each day that passes, you’re diminishing your returns from that account. According to the Commercial Collection Agencies of America, waiting 90 days can greatly reduce the collectability of an account and drive down returns by as much as 30%.

As an account ages, the accuracy of demographic information like phone number and address decreases as customers move and change numbers. It requires greater effort to recover—more time, staff, and skip tracing tools. Intervening in the first 30 days gives you the greatest chance of recovery. The more accounts you can get back into good standing now, the fewer the accounts you’ll need to pass along to third party collections, and the more whole dollars you stand to recoup.

  1. Reduces costs

Re-allocation of resources and investment are two of the biggest reasons more companies don’t engage fully in early-stage collections. With first party outsourcing, there’s no need to spend your own money on expensive customer-centric technologies or even your own time and resources creating a specific training program. A reputable vendor will be able to help you design a program tailored to your needs like call volume, portfolio size, and accounts receivable goals. You just pay per call or FTE.

  1. Generates long-term financial benefits by retaining customers

The collections process, regardless of how easy or friendly you design it, always leaves a bad taste in customers’ mouths. Sometimes they’re embarrassed. Sometimes they think your processes are the reason they’re past due. Whatever the case, first party collections offers a soft-touch collections approach. It often feels more like a friendly reminder that they’ve missed a payment than a collections call.

You can even use it as an opportunity to remind account holders of customer-friendly options you may offer like auto-pay and payment reminder texts and emails. If you don’t have any of these in place, then your outsourcing vendor should be able to help you create some of these loyalty-earning service options.

  1. Trains customers to make future payments on time

You don’t just want to be concerned with today’s past due receivables, you want to think proactively to stop the same customers from going delinquent in the future. Habitually late customers are bad news for your bottom line. By reaching out early with a live agent, you’re telling your customers you’re on top of your receivables and you’ll follow up. To avoid that call, those who can will likely re-prioritize your bills ahead of others, making sure you get paid first.

  1. Easily identifies friction points that contribute to delinquency

Going back to #3 for a second, sometimes your processes are part of the reason why customers struggle to pay their bills on time. Maybe your invoices could be a little easier to understand. Maybe your customer service line has too long of a wait time that customers just give up. A first party outsourcing vendor will help you identify these common friction points that are enabling delinquency and help devise a solution to rectify and overcome.

When your A/R feels chaotic and messy, you risk your entire business feeling chaotic and messy too. A/R madness raises uncertainty and increases pressure on your sales team to make up for lost revenue. But solving accounts receivable issues is more than just collecting those past due accounts. It’s about getting the most from what you recover and looking for ways to prevent delinquencies in the first place.


Featured Image: Shutterstock/Gangis Khan