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The end of the year is traditionally when your debt collection agency slows to a crawl. Consumers are focused on cooking, shopping, and spending time with friends and family. They don’t have the money, time, or patience for settling their debts. While that’s not great for revenue, this slow season has a silver lining. The downtime gives you the opportunity to prepare for the busiest period your agency will experience next year–tax season.
By now, you’ve likely done a lot of the heavy lifting already, especially in regards to the accounts you’ll be targeting in the coming year. But have you addressed all the housekeeping issues that can maximize next tax season’s revenue? Here are three ways to enhance your upcoming tax season collection efforts.
1. Update Your Compliance Management System
Most companies have some type of compliance management system that addresses the policies, procedures and work instructions that must be followed. When was the last time you delved into the ones created for your office?
It is usually suggested that policies, procedures and work instructions be updated as issues arise. After a problem occurs, you should conduct a root cause analysis to understand exactly why the issue happened. You can use your findings to locate the current policy, procedure or work instruction and update it to include newer or more thorough guidelines.
Don’t wait for a problem
During the most chaotic period of the collection year, you may not have enough time to take a breath, let alone put out fires and update your rules. Take advantage of the holiday season’s slower pace to browse for out-of-date rules you know you can fix now.
Review New Rules and Court Decisions
Debt collection rules and regulations are not static. Court decisions and new legislation are changing the compliance landscape every day. Take extra care to identify anything that has happened throughout the year that might change your day-to-day procedures. To stay in touch, follow collection industry news channels that can keep you informed on the latest stories.
2. Prepare Your Staff for Tax Season
When you’re preparing for tax season, don’t forget the people that keep your business running. Your staff needs to be ready for the coming busy season too. Make sure everyone is set up for success.
Hire and Maintain Your Employees
Project how many collectors you may need, and start the hunt now. Give yourself the time to evaluate candidates properly so you are not forced into a snap decision. The last thing you want is to hire someone you later regret having on your team.
Evaluate your hiring and employee retention practices to be sure you choose quality people and hold on to them once they’re established. If you don’t already, consider conducting stay interviews with employees to identify and fix trouble areas before you’re too busy to do so.
Train/Refresh Your Staff
Training new staff is obviously a must. If possible, try to get most training complete before things begin to gear up in the spring. Take this time to refresh current agents too. Reiterating the rules can save your compliance and consumer satisfaction from taking a hit when business picks up.
- Ensure staff has access to policy and procedure materials that pertain to them. Having the materials readily accessible will empower employees to help themselves before seeking advice from managers.
- Prepare your staff for higher risk of call baiting and other difficult scenarios. When pressured by higher than usual volume, agents are more likely to make a mistake. Reminding how to identify and respond to call baiters may keep you out of needless legal trouble later.
- Include support staff in pertinent training. Reception and other departments besides the collection floor may encounter consumers from time to time. Include them in any necessary training, such as spotting call baiting, so they’re ready too.
3. Roll Out or Fine-Tune Your Tax Settlement Campaign
Resolving accounts is usually easier during the spring due to the extra cash people receive from their returns. You might see even higher revenue during tax season if you get permission from your clients to offer limited time discounts on the amount select consumers owe (for instance, 10% off their original debt).
Some agencies do this on a large scale at tax time, and refer to the process as a settlement campaign. There is a lot involved in creating and running these programs. If you are interested in the in-depth considerations they require, read Collection Boot Camp: Strategy for Success with a Collection Settlement Campaign. For now, here’s a high-level view of the considerations involved.
Before Starting a Settlement Campaign
Before you offer to resolve consumer debts for less than they owe, speak to your clients. Some may be interested in the higher return the program could yield. But other clients may not want to offer this type of deal to their consumers. If you get permission to go forward, be ready to do some serious planning before you implement your campaign.
- Don’t start too big. Choose just a few classes of accounts to start, and analyze, analyze, analyze!
- Also understand that settlement campaigns don’t work on every type of consumer or with every type of debt. If you see less than one percent response rate to the campaign, reconsider settlement for that particular client or class of account.
- Arm yourself with the right tools to choose the campaign candidates. Using a scoring tool that grades the collectability of your accounts can quickly rule out those who might not be worth going after.
Tax Settlement Candidates
If you already run a tax settlement program, you’re already way ahead of the game. But there are ways to make this year’s campaign your most successful one yet. The key is in choosing the settlement offer candidates you decide to target.
- Don’t choose accounts that are too young or too old. If you pick accounts that are too new, you may be losing out on the chance to collect the full amount owed. If you choose accounts that are too old, you may be wasting your time on a debt that’s too difficult to collect. Many agencies aim for an account age of between nine months and three years.
- Don’t include consumers who are on payment plans, but do consider those who have made past payments and have since stopped.
- Consider candidates you’ve previously contacted and failed to collect from. Looking up the collectability scores of these consumers helps you make sure you are not wasting agent time on a lost cause.
One last note about running successful tax time settlement campaigns: refrain from using the word settlement with consumers. It can make them think of the legal term, and confuse or concern them unnecessarily. Discount, deal, or offer might be more easily understood.
If you’re interested in learning more about how a scoring tool can boost your revenue not just during tax time but year-round, read how one agency increased their annual collection revenue by 5% – 10% using scoring.