Preparing for a credit delinquency surge 

Photo by Isaac Garcia

No one is answering the phone, again. It’s tax season and debtors are scrambling to deal with the past few years of stimulus checks and estimated tax payments, or lack thereof. Inflation is up and mortgages tend to be a priority when it comes to loan repayment. Since December, credit card delinquencies have been steadily increasing.

All signs point to a surge. 

So, what will happen next? How will debtors deal with their forthcoming payments, and how will agencies accommodate the tide of new debtors headed their way?

How your agency can prepare for a delinquency surge

Three things happen when you know new debt might be on the horizon: You worry about staffing, you worry about training, and you worry about risk. We acquiesce that you might also get excited about new opportunities to collect within the debt coming your way — even so, you’ve got to prove the last few banner years weren’t a fluke. 

Right now is the time to consider how you can:

  1. Boost agent utilization and efficacy
  2. Train team members in record time
  3. Minimize risk

While you can’t control interest rates, regulations, inflation or labor markets, you can firmly grasp and impact your operations. With greater capacity and production, you can meet the inflection point in the industry with confidence. 

1) Boost agent effectiveness

Your agents are going to have to take on more avoidant debtors and longer repayment periods. They have to stay up to date on compliance regulations and get their notes right to minimize QA risk as volumes and hardships increase. And they have to do it all fast — remember, volumes. Is there a magic formula to increasing agent productivity in the right areas? 

First, you need a good sense of what those areas are. What do your agents do in a day? Where could they save time, while being more effective, if only they had the right opportunity?

Map their time to tasks and consider whether any of those tasks could be more easily automated. To prepare for the coming delinquency surge, your agents should be able to save time in the simplest way — by removing a repetitive task from their plate. 

Additionally, consider whether there is a way you can emulate what you know works. Do you have a good understanding of what tends to resonate with debtors? If not, find out. Your agents may be able to replicate your best agent to understand the most effective conversation to have with a debtor, and when to have it. Because you may get debtors on the phone less often as workers return to brick and mortar, every conversation needs to work toward repayment. 

2) Train agents in record time

Part of the challenge of dealing with delinquency surges or abatements is that you can’t always predict them with enough lead time to ensure you have the right number and type of full-time employees to support your goals. You can’t always find the right agents quickly, and those you do find and hire will need to be trained well. 

In a constrained labor market, the hiring part is enough of a challenge on its own — in a hardship-focused environment, the training is just as tough. 

What can you do to create the greatest chance of success for your agents, regardless of the current state of the labor market or the debt you handle? Move more quickly to help them focus on the right skills. 

Moving quickly relies on having actionable feedback in your hands. How will you know what to train or retrain on if you can’t see what your agents are doing wrong or right? Can you really handle Reg F, for instance, if your agents aren’t aware of where they’re bungling the disclosures?

Proactive trend identification is the key. Within days, you can train or retrain based on the realities within your agency. If agents aren’t able to speak with empathy in calls with certain debtor types, for instance, train those agents on those call types. Identifying where the problem lies is the first step. Outlining a path to success is the second. 

3) Minimize your risk

Irrespective of the debt you’re working at any given time, there’s always some level of risk inherent in collections. Now, with new regulations firmly in practice, your capabilities in compliance are the crux of the issue. 

Fortunately for you, internal QA/QM is not one of those dreaded aspects of debt collection that you just can’t predict or affect. Indeed, this area of operations is both critical for success and relatively easy to impact. For those reasons, scaling your QA capabilities now to minimize risk later — during a delinquency surge and always — needs to be part of your 2022 strategy. 

Imagine if you could go from 5 or 10% call review up to 100%, while saving time. Imagine you could create smart tags to flag compliance concerns immediately, before the calls are even reviewed in detail. Imagine if you could create automated compliance workflow suggestions for your agents! 

Not only would you avoid significant compliance risk, but you might save hundreds of hours and thousands of dollars a month. With these savings, you could focus on in-call efficacy, thereby helping you minimize exposure to long repayment times, as well.

And with the time and cost savings you’ll achieve via in-call efficacy, you’ll easily pay for the any investments it took to get there. 

In debt collection, speed still wins

As all signs point to surging credit delinquency over the next few quarters, we’re back to the beginning of a new debt cycle. The success of the last two years has been an anomaly — now, following up on them is a matter of preparation. If you train right now, you’ll be ready to run the race to reach your new debtors and get debts paid first. 

But you simply can’t get to the finish line without making a beeline for agent productivity and increased capacity.

See how Prodigal’s platform can help you stay ahead, starting right now.