Today the financial markets across the globe are gradually recovering from the recent recession and are hence tight on capital. The increased competition has further led to the situation where the margins for errors have reduced further. Any case of delinquency or write off resulting from bad credits or failed collections will weigh heavily on the prospects of any business during these turbulent times. Thus the role of collection analytics has gained even more critical significance for businesses of all sizes and kinds. Innovation, flexibility and faster response that are in line with customer behavior and preferred client communications are the only means of survival when faced with collection problems.
The Role of Collection Analytics for Businesses
The primary objective of collection analytics for any business is to help create an efficient strategy that will ensure maximum receivable recoveries with upsetting customer relations while inducing minimum costs in the process of collections. It is when your business is equipped with a reliable collections strategy that you can venture in new arenas seeking better business avenues. In order to stay ahead of competition your business will have to deal with customers and clients with higher risk profile hence the role of such analytics is indispensable. Additionally the analytics will provide insight into the avoidable expenses in collections process which imply higher savings and subsequent profitability for the business.
What does Collections Analytics Address?
Businesses often share clients with competitors, thus it is imperative to have the right collection strategy that will help keep the client engaged with you while according a greater share of his wallet for your dues. Collection analytics provides the right information at the critical junctures that let you make the desirable and most appropriate decisions. The four basic objectives that are fulfilled by such analytics are:
- Payment predictability based on analytical models which shall indicate the chances of success thereby reduce the expenses on futile efforts.
- Prioritize accounts so as to let you focus on those ones that require faster response due to high probability of losses.
- Create a workflow plan in conjunction with the company’s overall strategy using the most efficient means of contact thereby letting you harness the power of information technology to your advantage.
- Create a closed loop with risk analysts working along with the collection teams so the accurate feedback is received and worked upon.
Spin Offs of Collection Analytics
With the huge volume of information regarding client behavior that is processed in this kind of analysis a few additional inputs will also be available which can be used to further enhance efficiency and effectiveness of the collections strategy. Some of the important insights that will emerge as spin offs include:
- The right sequence of customers to be contacted.
- The most appropriate timings to make contact with the clients.
- The suitable means and ways of making this kind of contact with the clients.
- The exact layout of a collections contact conversation and approach involved therein.
- There may be important suggestions regarding the mode of contact which will vary as per client’s situation.
- It helps provide an estimate of the optimal penetration levels that are acceptable to ensure that the contact is fruitful towards the collection of dues. Over penetration is often cited as one of the reasons for failure to collect or loosing the client completely.
Using the Collection Analytics Inputs
Implementation is the single most aspect that determines the real value of collection analytics. Implementation of the analysis suggestions will include a comprehensive policy comprising of collection efficacy, staff productivity and overall return on expenses in this direction. Analytics will provide the requisite tools, interactive charts and graphs depicting gray areas to be addressed. The responsibility now lies with you have an implement able strategy where this kind of inputs can be taken into consideration. Individual behavior analysis when factored into the collection strategy will provide a significant aid to client retention. The dynamic feedback system as suggested by the analytics will provide a real time interactive communication system which will allow you to monitor as well as make kid course corrections in the collections strategy.
Collections analytics is a proven tool for improving the collections rate and cutting down on collection costs which can make a huge difference to business’s finances and image simultaneously.