Where Can You Cut Expenses in Your Collections Operation?

I have read a number of blogs about collection agencies looking to cut costs in this difficult economy. The three biggest expenses that were discussed were: employee expense, mailing costs and telecom expense.

Reducing headcount is only a good course if you have ineffective workers. Every company should do periodic reviews and eliminate staff when they are not performing to expectations. The best run collection companies continuously evaluate their operations and provide training to new and existing employees to make them more effective. By instilling high expectations and providing your employees the proper training to perform at a high level, you will make their work more efficient, clients will be happier and collections revenue per employee will improve.

Mailing programs are fairly consistent in price and services. Limiting mail returns and bulk mailing are a few of the common money savers. The biggest savings in mail costs can be derived from cutting down on the number of pieces sent. There are a number of scoring companies that will provide a program to determine which pieces are unlikely to provide an economic return.

Good collection software can also provide some basic criteria to eliminate those mail pieces that do not meet the minimum criteria to mail. For example, any account that has a balance less the $25 and is greater than 180 days old is not likely to provide a reasonable return on a letter series at 55 cents a letter.

FDCPA requires that an initial letter be sent. Once the letter is sent a message often is enough to get some yield on low balances. Sending statements by email is also a money saver, but managing that process is best left to an outside service that will assure compliance.

Telecom expenses are one of the easiest areas to determine services that are overpriced, underutilized, or to determine that new services are available that are better, faster, and cheaper. Many companies are migrating to VOIP services for the telephone and messaging systems. Hosted dialers provide all the features a collection company desires including messaging, text to speech, interactive voice response (IVR), automatic call distribution (ACD), inbound priority skill routing, and call recording.

As companies grow, telecom services often go years without any substantial review. A thorough review with an expert can often find thousands of dollars being spent on services that are not being used. Some services will do a review and they will charge a percentage of the savings that you will realize in the next 6 months or year. They can easily identify where you can save some cash with no impact on service.

Rodney MacKenzie is VP of Sales & Marketing for CollectTech Solutions. Their flagship software product is Wincollect.