Credit Risk Connection Top Tips
Promise to Pay – Communications Technology
One of the most critical elements of any collections strategy is Promise to Pays (PTP’s). However, many companies often overlook the mechanisms around this process, which can then impact collector productivity, collections results and customer service.
There are four main considerations around PTP’s: systems design, parameter settings, follow-up policies and the use of appropriate communications technology. This Top Tip covers best practice communications technology, which can drive significant improvements in collections results and customer service.
When we think of PTP’s we normally imagine telephone calls to initiate the PTP and then a follow-up call to ensure that the customer has indeed kept the PTP. However, we shouldn’t be limited by our imaginations and a number of organisations are making successful and extensive use of alternative communications technology for the generation and confirmation of PTP’s.
- In countries where the use of ‘virtual agents’ is allowed, collections departments have used this technology as a very cost-effective method to generate PTP’s. A virtual agent is a component of a predictive dialer, whereby the outgoing calls are pre-recorded messages. This technology has successfully been used to solicit PTP’s, whereby the recorded message asks the customer to call the collections department with payment information. Companies have found this technology less useful for confirming PTP’s and making reminder calls, due to the need for customer-confidentiality.
- The use of email to request and confirm PTP’s has become increasingly popular, due to the low-cost and immediacy of this communications medium. Typically initial email campaigns are automated and follow-up confirmation emails can either be automated or sent by clerical staff. Unfortunately, email addresses tend to have a shorter lifespan than physical addresses and so the collections and customer service departments need to invest time and resources in continually updating the customers’ email information.
- The most exciting use of technology is associated with cellular telephone SMS text messages. These are very low cost, are immediate, and have a much higher readership over letters or emails. With the advent of SMS text message personalization services, there is now sufficient flexibility to use this communications technology for both requesting and confirming PTP’s. There are now a number of organizations that specifically request a PTP via an outgoing SMS text message, which can be personalized to specify the amount due and due date. It is now also possible for customers to respond to the SMS with a text message advising when the payment can be made. There are challenges associated with updating the collections system with this SMS generated PTP information, however these are not insurmountable and manual updates can be implemented pending development of the necessary systems interfaces.
Watch this space for the next Credit Risk Connection Top Tip!
About the Author
Stephen J. Leonard, Founder & CEO, Credit Risk Connection
Stephen J. Leonard is the Founder and Chief Executive Officer of Credit Risk Connection, a risk management consultancy and value-added reseller of analytics, consulting, CRM, scorecards, software and training. Stephen has over 25 years’ of specialist credit risk management experience in the emerging markets of Europe, Middle East, Africa and South Asia. He has managed assignments with over 150 clients in 30+ countries, covering the entire credit life cycle and the complete range of organizations and products in the consumer credit, SME and credit bureau industries. Stephen holds an AS, BA and MBA and can be contacted at SLeonard@CreditRiskConnection.com