How are you managing your collections? Over the last 12 years, I’ve had many requests for services in collections, and many people asked me this question. I did the same when I was offered my current position, as I had no interest in doing the same thing that’s been done for centuries, simply rebranded into another clone.
You see, many products for collections forget one very important thing – the member. Most are all about the money, not caring about the success, decline, or the future of the members, believing they can simply get others. Others that are perfect, others that haven’t slipped and are easy. But, easy is boring, and there’s not an endless supply of members to gain. If companies don’t work with people to help bring them out of their financial difficulties, then they are terminating their own business. Who will be left to lend to in the future if they allow, nay, become a proponent of the demise of the credit-worthiness of members?
A new approach
Thus, I’m introducing a new collection philosophy: don’t ask for money. Now, I hear you saying that asking for money is your job, but I’ll stop you there. That’s not the job, that’s the easy thing to do. But, it’s not about doing what’s easy, it’s about doing what is best for both parties. Help the members solve their financial difficulties, bring them back to being a member in good-standing status, and credit unions will be able and willing to lend to them again. The member is better off, the credit union is better off, and the future is more promising.
That is what makes a company different and more interesting as a collections option. Sure, all companies have the technology to make automated calls and never talk to a member, but the vast majority of the time, if the member has the money, they’ll pay you. You need to find out why they don’t have the money, how long the catalyst will continue, and what you can work with them on in the meantime to maintain the loan at a workable level to satisfy the auditors.
Work with the member
It all starts with asking questions. And no, you’re not asking when they’re going to pay you (you usually get lied to the first 2-3 times anyway), but what is causing the financial challenge. Sounds easy enough. However, finances are a sensitive subject to broach, so your members may often feel confused, scared, humbled, embarrassed, angry, or any combination thereof.
These emotions are why collectors get the backlash from members. They are pushing the buttons that members don’t want pushed. They don’t want to talk to collectors about their financial struggles and expose their vulnerabilities to a stranger. But that is how you can be different. Train your collectors to ask questions, listen to the answers, and offer solutions based on experience and options available via the credit union.
That is also what makes the job interesting for employees; it’s never the same. True, it will always come down to loss of income or gain of expenses, but work with the member to bring them back to where they were when they originally took out the loan. Helping out members, and learning how they got there, how long their struggles will last, what they’re willing and unwilling to do, and what can you work with them on is what makes the job so interesting and complicated. Save those late fees and have a strong portfolio of well-paying members. That is what you should strive for in your business.