3 Ways Lenders Can Improve the Collections Process

The majority of reviews for collections agencies are negative. More often than not, they are really negative. Practices on the verge of (and sometimes crossing the line) of harassment seem to be the norm for businesses trying to get money people owe.

Granted, the person who took out the loan did sign a contract. They made a promise. And then they broke it.

But why does the collections experience have to be so negative?

If we boil collections down, what is it? It's psychology. It's the understanding of how people work and what makes people act. It's empathizing with them and offering them solutions to make their life and the life of the business better.  

So how could collections be turned into a positive experience?

1. Connect with the customer any way they want

Having an omnichannel collections process is your first step to getting your money back. If someone doesn't want to be called on the phone, don't call. If they don't want a voicemail, don't leave one. You have to communicate with them, but try doing it in a way that's convenient for them. They will be more willing to make a payment if it's through the channel they prefer. 

2. Make it incredibly easy for your borrower to make their payment

There's nothing more frustrating than trying to make a payment and failing. Data highlighted in an infographic from Milo shows that 56% of respondents expect a variety of payment options on the payment page. The bottom line is the easier it is to pay, the more payments you'll receive.

3. Be consistent

One of the best ways to help people make their payments is to remind them about it. Automated reminders (text, email, even snail mail if they want it) can drastically increase the number of people that will pay. Quickbooks showed that timely and regular SMS messages (which cost almost nothing) are as effective as a 25% reduction in the monthly interest rates (provided as an incentive on timely payments) in ensuring timely loan repayments.

How convenient would it be to receive a text that says "Your payment is due in two days. Respond to pay now."

That's what people want.

The people that are receiving collections notices aren't in a great spot. You know that, and they know that. So make collections a good experience by being nice, being understanding, sending reminders, and making it easy for your borrower to make payments. 

Doing these simple things can help you get your money, get your borrower back on track, and create a better borrowing experience for all parties involved.