Access Receivables Management

Have you considered online chat for collections?

Tom Gillespie — Thu, 02 Feb 2012 19:05:00 +0000

Access recently introduced on-line chat as an alternative method of communication for delinquent customers. The results have been immediate and impressive. When a customer goes to our bill payment site at www.2mybill.com, they are faced with a choice of either connecting via live chat session or connecting to our virtual collector. We thought that the addition of online chat would be a great tool but, it may actually turn out to be even better than we first thought. Here’s why:

The PEW research center recently reported that seventy-three percent of cell phone owners text one another, and send or receive an average of 41.5 messages on a typical day. This comes to approximately three messages every waking hour. Not surprisingly, young people are the most voracious test messages. Cell owners between the ages of 18 and 24 exchange an average of 109.5 messages on a normal day — or about seven each waking hour. The text rate messaging statistics internationally are even higher. Interestingly, the less education and lower the income level of respondents, the more they were likely to text. For example, respondents with less than a high school education reported an average of 70 texts a day, versus 24 a day for those with four years or more of college. The survey authors did not offer an explanation for this disparity. The Pew Research Center also asked in a survey how people prefer to be contacted on their cell phone and 31% said they preferred texts to talking on the phone, while 53% said they preferred a voice call to a text message. Another 14% said the contact method they prefer depends on the situation.

FACT: Texting and online chat is increasingly preferred among a rapidly growing segment of consumers and business owners. This preference may be so significant in those segments that other traditional forms of communication are no longer a factor. Land lines are quickly becoming a thing of the past. As consumers migrate online to manage their business transactions and decisions, the influence of chat on the customer experience will continue to increase. The Pew report states that one-fifth of both Gen Y (ages 18-27) and Gen X (ages 28-40) consumers located and engaged in online chat when they visited a company’s website.

Over the last few years, Access has been a leader in developing a greater connectivity for delinquent customers via the web. When we started our company in 1999, our payment site (2mybill.com) received only minor traffic. In 2008, we introduced a virtual collector on the web. Our virtual collector has been very successful in helping customers to self- resolve their account. The online chat feature just introduced this month is quickly becoming a great addition to our communication methods. In the first day, it was introduced, we had several people connect with us and pay their bill or make arrangements. At least one of those individuals was a foreign debtor that was able to communicate back and forth with our representative in their language and make an arrangement to resolve a $3,000 account. Oh yeah, I forgot to mention that our online chat product allows us to communicate with debtors all over the world in their language, sweet.

Successful collections is all about successful communication. On-line chat is another great channel to add to your arsenal for collections and customer service. It’s a highly cost-effective method of reaching out and making yourself more accessible to your customer.

Small Business Collection Trends

Tom Gillespie — Wed, 14 Dec 2011 23:17:55 +0000

There are roughly 5.8 million small businesses in operation today – two-thirds of which
generate less than $500,000 in annual revenue. These enterprises make up over 95 percent of businesses in the United States and one-fifth of total revenues. Many of these businesses are the ones feeling the most pain in our current economic downturn. For example, one of the areas Access has focused on traditionally is insurance. the insurance industry has seen a significant downturn in commercial lines “earned premium” over the last few years because typically, premiums for things like workers compensation insurance are based on payrolls. most of the business we receive from P&C companies are construction or hospitality related. These industries are clearly having difficulties.

What’s in a Name?

One of the problems for creditors over the years was that some dishonest business owners would simply open a new bank account and start a new company periodically and let the old company die a slow death. The subtle name change was transparent to their customers, but to creditors it was a problem. They would put the new company in their wife’s name, child’s name or worse. Since credit for businesses and consumers was widely available, it was easier to get credit within 30 days opening a new bank account. Personal guarantees and social security numbers were not required by the creditor and were not always required as a condition of obtaining credit. In the last few years, this practice is changing rapidly as savvy lenders view small businesses more like consumers. Without credit and business credit cards, small businesses cannot survive.

View a Small Business Customer Like a Consumer

Studies over recent years have shown the following:

Small business online purchasing and payment behavior mirrors consumer behavior. On many levels, the online payment preferences of small businesses are very similar to that of consumers. Preferences begin to diverge as the small businesses annual revenue grows or as the years the small business has been in operation increase.

• Credit is an important feature of any payment method. Not surprisingly, for a majority of small businesses, corporate cards and other payment instruments tied to credit are the payment devices of choice. But there is also a growing interest by Small businesses in alternative products tied to checking products.

Litigation is Expensive and Less Productive

Traditionally, commercial collections was pretty cut and dry. If the debtor refused to pay, and the balance warranted suit, the client and the agency would agree to litigate the account. This was a “win” for the debtor because often, it bought the debtor a year or more before needing to discuss the debt and they could continue business as usual. To make matters worse, the debtor would either enter a long-term payment plan after being sued or settle the debt for a much lower amount on the courthouse steps. Clients felt compelled to sue quickly to “protect” their place but if the debtor closed his doors (on paper) and reopened under another name, the process would start all over again.

Why Credit Matters

We have taken a different approach at Access. When the debtor says “Sue Me”: or “I Don’t Care”, we simply tell them that it is our responsibility to report their debt to commercial credit bureaus within 90 days if there is no “valid” dispute and they are unwilling to resolve the debt in a reasonable period. We also point them to a new website we have created, www.whycreditmatters.net. We explain that in a post 2009 environment, their personal credit and their business credit are almost one in the same. Also, we give them the facts that their credit report is being viewed at least 100 times per year by all of their creditors for behavioral scoring and credit scoring purposes. This approach is less adversarial than the legal approach which the debtor expects and in some cases prefers. The result of our less adversarial and educational approach has been greater coöperation, admission of a problem, better open communication and higher resolutions. In 2012, a less adversarial approach coupled with real credit education is the right way to resolve a higher percentage of accounts over a shorter period with less cost. It’s simple, before a debtor will pay the bill, they must understand it is really in their best interest.

WhyCreditMatters.net – Helping debtors understand the consequences of non-payment.

Tom Gillespie — Tue, 06 Dec 2011 19:49:02 +0000

Many of today’s debtors became adults in an environment of easy credit and no consequences. Often, they simply don’t understand the ramifications of bad debt and lack of credit.

To help remedy this situation, we launched WhyCreditMatters.net. It does not collect bills, but an educational website where debtors are referred as part of our collection process. In clear, simple language with easy-to-understand examples, it shows how not paying obligations can prevent debtors from establishing credit, buying vehicles, buying homes, renting an apartment and even getting a job.

What I am thankful for.

Tom Gillespie — Wed, 16 Nov 2011 16:50:15 +0000

So many people are down and out at the moment. I have stopped listening to the radio on my way to work (I am a CNBC junkie) because everywhere you look, the news is depressing. Add to that an upcoming Presidential election, and other horrible news events that can make even the most positive person shudder. I guess what I am trying to say is my programming needed to change as we approach the holidays. I have so much to be grateful for this year. It starts with my wife and children. I am blessed with an amazing wife and partner of over 34 years. Our three children, tom (31), Tara (29) and Kevin (26) could not make me any prouder as a parent. I am also grateful for my ACCESS Receivables family. I have never worked with a group of people that are so dedicated and team oriented. On the days that I get down, I can easily get my motivation watching one of my employees facing life issues with a smile while they work tirelessly to help this company to achieve its goals. In a very difficult economy, ACCESS is having its’ best year ever. It has required everyone in our company to re-think their contribution and embrace change. To my delight, our team has stepped up to this task with enthusiasm.

This year, we did a total makeover of our company. We took a fresh look at our company with a blank page. Looking at a 12 year old company with fresh eyes is a daunting task because you have a tendency to hold on to the past. We did this because we feel that there is a fundamental shift in the way bills need to be collected in the future if agencies are going to be successful. ACCESS has traditionally been the top vendor for most of its clients because of our investment in high quality people, skip tracing, great training and simply hard work. That being said, we do not want to be the best vendor in an environment where the bar is lower for everyone. Our responsibility to our client rests in our continued improvement and innovation. So, as unsexy as it was, we reviewed every job description, workflow, trading program and procedure. In the end, a completely new company has emerged with a new theme, “Nice People Collect More”. It has taken countless hours on the part of everyone and especially my management team to identify how is more successful in a tough economy while also creating a solution for the debtor company or individual. We will be launching our new website in December and I hope you will take the opportunity to visit and give us your thoughts. Did I tell you I am grateful for the 400 clients who have entrusted us with their delinquent receivables and put their faith and trust in ACCESS every day? We will make every effort to be your best possible resource for third party recovery. Happy Thanksgiving.

Design a win-win collection program.

Access Receivables — Mon, 14 Nov 2011 21:01:22 +0000

My involvement in the debt collection industry spans over 30 years. In that time, I have watched the collection industry change in many ways. One of the things I have seen change over time is the concept of working every account to return the best percentage without complaints. Now, don’t get me wrong, I believe that the goal of most collection agencies is to meet the best possible return for every client, but it is becoming increasingly difficult to achieve the best returns in the current atmosphere of rate-cutting. On the surface, it would seem that creditors are getting a great deal today. With commercial and consumer rates for collections falling, as agencies battle for your business, rates are becoming much lower than those traditionally charged in our industry. Predictive dialing, IVR technology, scoring and lower long distance rates have enabled collection agencies large and small to compete with larger firms . Fundamentally, however, you still need a good collector on the other end of the phone to bring home the money. But good collectors cost money — and this is where the biggest challenge lies for collection agencies today. Rates are so low, it is all but impossible for agencies to staff your business effectively enough to get you the best possible return. When you select an agency, you need to decide what is more important, the “net back” return, or the rate. The competition in our business is so great that many agencies will sometimes charge whatever they can get. In fact, in my home state, one large government contract is commanding a 4.5% rate. And the client only requires one collection attempt per month. They call that a collection program?

Historical Prospective
Back in the early 1980’s, A major department store was faced with a problem. As a national creditor, they typically used large, national agencies. However, these agencies had other, larger, national clients including major banks and credit card companies that dwarfed them in size. they also had a lower average balance and was tougher paper. The key to success for large national creditors is to get their agencies’ best people working their files. Knowing this, the department store paid their agencies a 40% rate across the board. The going rate back then was 27-30%. The net result — they tended to get the best collectors, had lower agency turnover and consistently higher recoveries. Why? Because the agencies could afford to put more effort into every account, and coveted their business.

Analyze Your Business

If you want to receive the highest “Net Back” return, you first have to figure out how much your business is worth. Let’s use the following hypothetical example to analyze your business:

Average Balance = $1,500
Current Recovery Rate = 20%
Amount Collected Per Account = $300.00
Agency Fee Percent = 20%
Agency Unit Yield (FEE) = $60.00
Net Back to You = $240.00

In this scenario, the agency has a $60.00 unit yield, which means it has a good margin with which to give a high level of experienced collection work, along with in-depth skip tracing.
Your goal, in the end, is to get the best possible “net back” return. Ask potential and/or current agencies to give you a work plan and staffing proposal based on performance (i.e. they are paid a higher percentage if they return a higher percentage, but need to commit more resources to your file). Set your base recovery rate at the current 12-month return (in this case 20%).
Once your agencies know that you are willing to pay for quality, they will make every effort to impress and get you the highest possible recovery rate. At the end of the day if you pay the agencies 5% more and they return 5% more you will be the big winner.

In the scenario below, if the agency looks for a 40% gross margin, they can invest $56.00 on each account as opposed to $36.00 per account. In addition, you just increased your “net back” recoveries by over 17%.

Current Recoveries New Recoveries
Average Balance $1,500 $1,500
Recovery Rate 20% 25%
Amount Collected Per Account $300.00 $375.00
Agency Fee Percent 20% 25%
Agency Unit Yield (Fee) $60.00 $93.75
NET BACK TO YOU $240.00 $281.25

In final analysis, not all the technology in the world will get you the best possible return unless the person on the other end of the phone is a highly trained and effective collector.
Every agency has them. Why not make sure they are working your accounts.

One Final Warning:
If your agency is giving you a real cheap rate and you have no audit program in place, you are inviting trouble. In my earlier days, I was Vice-President of Marketing for FCA International. FCA was the world’s largest collection agency at the time with 120 branch offices in 5 countries. As part of my responsibilities, I was involved in 10 collection agency acquisitions during a five years. To my surprise, I had many experiences where we found out after acquiring a collection agency that the owner was siphoning off debtor payments and had 2 sets of books. In one case, the theft was so alarming, that we immediately terminated the former owner who had an employment agreement with our firm and reported our findings to the States Attorney General’s office. While the case was being investigated, FCA was under a gag order not to divulge any information to anyone including the effected clients that there was a misappropriation of funds. One day, I walked in to a branch office and thirty clients had sent letters of termination in one day because we fired the former owner. The comment I often got when visiting the clients was “If Joe (not his name) is no longer employed in your company, we have no interest in doing business with you. At the end of the investigation, we identified over $250,000 that was embezzled from almost every client across the board. Joe’s agency charged low rates in comparison to the market (go figure).

Most collection agencies have high standards of excellence and really want to give you the best possible return on your accounts. By designing a win-win collection program with your agency, you will receive the highest possible net back return over time. Also, seed your accounts periodically so you can audit the quality of the work that they do.

Do you know your credit score? Do you care? You should.

Access Receivables — Fri, 07 Oct 2011 03:40:46 +0000

It’s amazing but most people don’t know their credit score and most people don’t want to know. If you don’t believe me, just ask 10 random people when was the last time they pulled their credit report and their credit score. I guess most people think it’s kind of like cholesterol. They don’t want to know. Everyone you do business with knows your score, why shouldn’t you? In the world of credit, what you don’t know, can and will hurt you. In fact, it can hurt you for many years. At Access Receivables, we have recently undertaken a new initiative to educate our debtors on the importance of credit (Nice people collect more). Once people know the real facts about credit, we are confident that they will want to pay their bill before we are forced to report it to the national commercial and consumer credit bureaus (we report for most of our clients). At Access, we offer the debtor with a 90 day window of opportunity before reporting their account as a collection account. This gives them the time to deal with dispute issues, and to resolve the balance. Once we report the account, however, we are required by law to continue reporting that account accurately for as long as we have the account in our system (up to seven years). In the past few years, so many people have become frustrated by the sudden turnaround from easily available credit to very tight credit standards, many have just given up. The facts are the facts. We got into this current economic mess because we granted credit to everyone from high school students with no job, to aging seniors with no money. Although I am not on the current bandwagon to protest the banks, I have seen, first hand for many years, the effects of issuing too much credit to people who can’t afford it. The unfortunate thing is that most people felt for years that if the creditor granted the credit, they must know something we don’t. We actually believed them. As a result, i ran up my credit just like millions of other Americans (just doing my part here). It’s amazing to me that we do not teach people in schools how to write a check, make a household budget and set up good credit.
My Credit Story
Growing up in the 1970′s, it was much harder to get credit. The first thing I did was save up $1,000 and open a savings account at a local bank at the age of 19. I then took out a secured loan for $750.00. I made payments on that loan every month and 90 days later, I applied for and received a Sears Credit Card (Sears was the Wal-Mart of the 70′s). Soon after, I paid off the loan (because I never spent the money) and applied for an American Express Card. Yes, at the age of 21 making $11,000 per year, I was a card-carrying member of AMEX (your income is not a factor in your credit score). All these things continued to build my score and that same year, I bought my first home ($35,750 @ 8.5% 30 year fixed rate mortgage). Although I started strong because of that secured loan, I did not always have stellar credit. Fast forward 5 years and my wife and I had three children and a $60.00 per week diaper bill (yikes). Since I was in the collection business at that point, I knew that I needed to pull my credit report at least once per year and check for errors as well as make every effort to keep that credit card bill paid as best as possible. I have found MANY errors on my report over the years. Robbing Peter to pay Paul was a motto at my house in my formative years. When tax returns or unexpected bonuses came our way, we would pay down those pesky credit cards. There was one added benefit back then though. Credit card interest was a deduction on people’s taxes. The government was encouraging both husband and wife to work so we could buy that house and also to spend first-pay later. Why? Because our spending fuels the economy. Allot has changed since I was 26 years old. Here’s what I call the “Circle of Strife”.

Banking and Credit Cards

In the late 1980′s the deduction was eliminated. During the Reagan years, interest rates came down, houses continued to appreciate, home equity loans became popular (it was only deductible if your use of the money was “home improvement” related), banks began to increase credit lines, decrease credit score requirements and Americans began to “buy now-pay later” in huge numbers. In fact if you are between the age of 21 and 45, you probably have never had to worry much about getting turned down for credit. If your credit score was lower (<740) you just paid a higher interest rate. The interest rate became secondary to the "monthly payment". This was compounded by the fact that credit card programs were consolidated over the years and today, just six institutions issue the majority of all credit cards. As a result, interest rates have increased dramatically for those persons with lower credit scores. These people would have been denied credit in the past.

In 1987, we new legislation allowed for Interstate Banking. This created the enormous wave of bank consolidation over the next 20 years. Did you know that in 1987, Bank of America was a California bank? So the banks get bigger and during the Clinton years, we had a fundamental shift by eliminating the Glass-Steagall Act in 1999. The Glass Steagall Act of 1932 was written to make sure that banks did not get too big, made sure they had enough reserves and limited their scope in business activities. Fast forward to 1999 and the American banks were complaining that they could not compete with the largest "nationalized" banks in the world. As a result, banks became super-conglomerates with banking, insurance and investment products. Can you say "recipe for a financial meltdown?

Housing Market

The greatest investment that anyone could make when i was growing up (Born:1957) was a house. The problem was, you generally needed 20% down. Remember that first house for $35,000? Well a $7,000 down payment was a lot of money for a couple of earning $21,000 per year. This was the reality in 1978. Starting with Jimmy Carter, every President had an initiative that every American should “own their own home”. It was an American rite. The government initiated many programs including Fannie Mae and Freddie Mac while the mortgage companies came out with more and more creative finance programs to fuel the fire. People that had rented for years were buying homes because they were told they could now afford “the monthly payment”. The products were way too advanced for the average person to comprehend but it didn’t matter because housing prices went up so fast that they could refinance at 100% loan to value in a year or two after they purchased the home. It was a pretty good deal while it lasted…The result was, as everyone knows, a huge housing bubble that led to the collapse of our real estate market in 2008 and continues with no immediate end in sight.

What does this have to do with me, Tom?

Well, we are now “back to square one”! The circle of strife. I seriously doubt the levels of credit that were extended in the past will ever be re-visited. We came so close to financial ruin in 2008 that we have new restrictions in place and even our politicians have stopped speaking about “The American Dream”. Today, the American dream is to have a job, good credit and decent medical care. Credit scores are now being scrutinized by every credit grantor before they decide to lend me the money for that new car, washing machine or dare I say, a 72 inch LED Screen? Today, the credit standards are going back to more conservative levels and if you have good credit, everyone will want to give you more. If you don’t have good credit, you’ll need to get some in the next few years. In addition, credit grantors use behavior scoring models and other complex formulas to decide if they should lower your credit line or increase your rate, even if you are paying your bills. Foe example, did you know that if you pay one creditor late but the others are current, they can all increase you interest rate next month? Read your credit card agreement.

At Access Receivables
we often hear people say (out of frustration), “I don’t care about my credit”. This is one stance that no reasonable person can afford to make in 2011. A few years ago you didn’t have to worry. If you were breathing, someone would lend you the money. Also, just before the financial meltdown, we reformed the Bankruptcy laws. If you know someone who is thinking about Bankruptcy, there is a strict procedure that includes credit counseling and education before you can file. In essence, if you want to attain any decent standard of living, you must protect that credit report and that credit score as you would protect a Honus Wagner baseball card (last sold at auction for $2.8 Million). Today in 2011, credit reports and credit scores are being used to decide “if” you get that new car, “how much of if” you pay for the insurance (most insurance companies pull credit reports) “if” you get that job you applied for (statistics show people with higher scores are better employees) “if” you get that apartment, how much credit you “deserve”, etc. In essence, to get enough credit to support a higher standard of living, today we need to earn it one payment at a time. How do you get good credit, or repair bad credit? That’s another article. But a good place to start is WWW.MYFICO.COM. If you go there today, at least you will know what everyone else knows about you tomorrow.

For Colleges & Universities

Access Receivables — Tue, 20 Sep 2011 18:13:31 +0000

For Insurance Companies

Access Receivables — Thu, 15 Sep 2011 20:40:48 +0000

For Leading Telecom & Tech Companies

Access Receivables — Thu, 15 Sep 2011 20:30:00 +0000

Ut’s our motto here, and Donec gravida posuere arcu. Nulla facilisi. Phasellus imperdiet. Vestibulum at metus. Integer euismod. Nullam placerat rhoncus sapien. Ut euismod. Praesent libero. Morbi pellentesque libero sit amet ante. Maecenas tellus. Maecenas erat. Pellentesque habitant morbi tristique senectus et netus et malesuada fames ac turpis egestas.

Donec gravida posuere arcu. Nulla facilisi. Phasellus imperdiet. Vestibulum at metus. Integer euismod. Nullam placerat rhoncus sapien. Ut euismod. Praesent libero. Morbi pellentesque libero sit amet ante. Maecenas tellus. Maecenas erat. Pellentesque habitant morbi tristique senectus et netus et malesuada fames ac turpis egestas.Donec gravida posuere arcu. Nulla facilisi. Phasellus imperdiet. Vestibulum at metus. Integer euismod. Nullam placerat rhoncus sapien. Ut euismod. Praesent libero. Morbi pellentesque libero sit amet ante. Maecenas tellus. Maecenas erat. Pellentesque habitant morbi tristique senectus et netus et malesuada fames ac turpis egestas.

Nice People Collect More

Access Receivables — Fri, 02 Sep 2011 22:18:57 +0000

I am so excited about the transformation our company is undertaking. We are creating a whole new website and educational presence on the web to educate people (debtors) on the importance of paying bills and improving credit. I have always believed that a helpful and knowledgeable approach to collections is far more successful and will assist both debtors and clients to get through difficult times and come out stronger on the other side. Our theme is “Nice People Collect More”. It’s more than just a slogan however, it’s a whole new way of collecting. Actually, in some respects, it’s getting back to the basics of collecting.

Over the years, i have seen many changes in the collection industry but this new transformation is one i really believe in. We are going to start an education program for our debtors in tandem with our responsibility to collect for our clients. The point is that many people today are simply not well informed about the importance of their credit and many have given up. From 1990-2008, it was pretty easy for everyone to get credit regardless of their past payment habits. In turn, collection agencies did not have to work very hard to get customers to consolidate their bills and PIF the account. In fact, terms like “account treatment” and “dunning” went hand in hand with going through the motions. Enter 2009 and the recession. Going forward, it appears that banks are going to be far less aggressive in lending. That means fewer credit cards, lower limits, fewer auto loans, mortgages and home equity loans. The people who are affected the most are the ones who will also need the most credit in the next 5-10 years. Life happens. Babies are born, cars need replacing, washing machines break down and so on. The only way to improve your credit, is to pay your bills. Over the last few years, people have been conned that not paying their bills or even getting out of paying their bills is a better option. I hear things like, “well I don’t care about my credit” or “The government doesn’t pay their bills, why should I”.

A positive win-win approach is always better than an adversarial one. There are scores of default judgments out there collecting dust. As with all collections, nothing is a total answer. Many people will continue to ignore their responsibilities hope that the problem just goes away. There will be some that embrace “the facts” and make a sincere effort to resolve their account who may have simply ignored it in the past.

Our collectors are being trained every day how to be counselors. We are training them to assist the debtor in resolving an unpleasant situation. The debtor is not our enemy, they are our ultimate customer.