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Two Factors to Increase Recurring Payments
There are two major factors that drive the recurring payment stream in your office: the monthly payment amount and length of a payment schedule. You should be doing everything possible to maximize both factors.
Increase Monthly Payment Amounts
The first way to get more from your recurring revenue stream is to increase the monthly payment amounts.
If you can get each staff member to increase the payments they are setting up with the consumers by 10%, that quickly adds up to a tremendous increase. But what if you could get 15 or even 20% higher average payment amounts?
There’s a simple three step process to increase recurring payments:
- Review the data on your recurring payments, so you know where you currently stand. Pull a report of all the successful recurring payments over the last 30-90 days.
- Calculate your average payment amount on your recurring schedules.
- Sort the payments by balance. Then, sort by the payment amounts. How many are the same amount? Chances are you have many payments at $25, $50, $75 or $100. How about odd amounts? Do you have payments at $58.86 or $33.67 or $106.08?
Why do you have so many even payments?
Collectors oftentimes suggest a round monthly payment number to consumers during schedule setup. Just as frequently, a consumer asks for round payment amounts.
Why is that wrong?
Because when your staff negotiates for a payment arrangement using even numbers, they leave easy money on the table.
Train your collection agents to offer a payment schedule based on time frame. A sample script would be:
“I can offer you a payment arrangement, but I can only extend the account out for 6 months, since that is the longest this client will allow on interest free payments to liquidate the debt. That will equal a little more than the $100 a month you requested, but not by much. It will equal 6 payments of only $116.36. When can you have the first payment?”
This example is an easy 16% increase in payment size over the original and since there is nothing to negotiate based on the offer, the consumer will accept the arrangement and pay it.
If they can pay $100 monthly, the extra $16 should not be a problem.
Negotiate Monthly Payment Amounts Based on Time
The second way to increase your recurring revenue stream is through negotiating the payment arrangement by time rather than dollar amount.
When your staff can break down the monthly payment amounts by time, they can reduce the time and effort spent negotiating. This makes it easier for agents to take control of the collection call. Your staff can now state the arrangement parameters instead of deferring to the consumer.
By negotiating the monthly payment based on time, you can increase you average payment amount by a 20% and the consumer will pay off the debt faster.
PDCflow software includes a flexible recurring payment module that allows the administrator to set up minimum payment requirements along with maximum terms. These functions give management the ability to decide payment terms by time.
To learn more about PDCflow software and setting up recurring payments, schedule a demo today.