Top five advantages of outsourcing credit card collections

With a 13% cumulative increase in credit card balances since the second quarter of 2021, credit card debt in the U.S. is rapidly approaching a 20-year high. In part because of rising prices of consumer goods, people are now carrying higher balances and applying for larger credit limits, according to figures from the Federal Reserve Bank of New York.

This trend means it’s more important than ever for credit card companies to facilitate payment in the best way possible. The big question is: where do you put your focus?

The answer: more effective collections.

When surveyed, 33% of consumers responded that issues with collection were the primary cause of complaints, according to a report by WalletHub. When handled poorly and without empathy, collections calls can leave a consumer feeling stressed, frustrated and demotivated about paying. As well, when not plainly and clearly articulated by an agent, the payment process itself can be confusing and annoying to debtors.

Outsourcing credit card collections to an experienced partner with well-trained staff and the right resources to handle a large volume of cases with efficiency and tact is something you should strongly consider doing for the following reasons and more.

1. Debt collection outsourcing can save time and resources

Getting a debtor to pay their outstanding balance can be a painstaking and time-consuming process for myriad reasons, including:

• They may refuse to respond.
• They may have recently changed contact information.
• The primary debtor may be deceased.
• They might be away from home for an extended period.

Attempts to resolve debts can go on for years, with each and every call, letter and email taking up time and resources from your organization. Outsourcing soft collections to a contact center provider with experience in debt collection lets your brand focus on hard collections and other, more complex efforts.

2. Debt collection outsourcing can increase productivity

Being able to outsource your consumer debt collection frees up a lot of internal resources. Primarily, it allows you to reassign collections personnel to other duties — notably, higher-value work — without the distractions and lost efficiency that come with a split focus. The end result is a collections solution that is easier to administer and less stressful for consumers.

3. Debt collection outsourcing can leverage deep domain expertise

One of the biggest boons you get from debt collection outsourcing is also the simplest: A dedicated and experienced team of staff that understand how the industry works.

A well-trained and efficient collections agent knows how to form a proper rapport with the debtor and connect with them on a human level, rather than just being the representative of a corporation.

On top of that, your collections partner can afford to invest in the latest technologies that help them handle customer invoices and inquiries, keeping things streamlined and organized. A tech-forward partner invests in and develops solutions in service of multiple clients with similar needs and pain points, which ultimately brings the per-client cost of these services far lower than you could achieve if you did it exclusively in house. These synergies enable an outsourcing partner to operate with much more efficiency than an in-house team.

4. Debt collection outsourcing can reduce collection time

More training and better equipment creates an overall more effective workforce. More than that though, a dedicated soft collections partner can offer something you don’t usually have to spare: time.

Since their entire focus is on the task at hand, they can devote all of their time and energy to a single task. It’s a general rule of thumb that a specialist can perform a job better than a generalist due to this simple premise.

5. Debt collection outsourcing can reduce delinquency

Putting everything together, the right soft-collections partner will be able to:

• Dedicate more time to the task;
• Have the ability to hire and train staff at scale;
• Implement the latest next-gen technology to meet your goals;
• Leverage refined procedures and methodology for greater efficiencies.

All of this comes together to provide maximum effectiveness and better results. Remember, nearly one third of consumers have issues with the collections process, usually stemming from perceived rudeness, unprofessionalism or lack of due diligence on the part of the collector. Outsourcing this process to an experienced and knowledgeable provider can have enormous impact on the creditor’s rate of delinquency.

What to look for in a credit card collections partner

When considering a credit card collections partner, it’s important to look for a few key things to make sure you’re getting the best service:

1. Make sure the company is well-established and has experience in the financial services industry. Having direct experience to draw on makes anticipating and resolving issues a much smoother process.
2. Ensure that they are complying with all industry-specific rules and regulations. All collections agencies have to adhere to a set of guidelines set by the Fair Debt Collection Practices Act.
3. Verify that the staff are knowledgeable and courteous. The ability to project empathy and answer any questions the debtor might have are important prerequisites for anyone in this industry. Each staff member should also know the rules they need to abide by, and adhere to those rules without being prompted.

As a trusted partner, TELUS International works with global brands to develop strategies that deliver payment success along with customer satisfaction. Contact our team of professionals today.