How to Navigate the Path to Profitability Without Tripping Over Your Collections Strategy
Jul 10, 2023, 15:53 ET
By Doring Lloyd
I don’t really understand why I think about work while I’m on beautiful hikes. It’s probably because of the constant headwinds we all face regarding our economy, inflation, interest rate hikes, job losses, auto delinquency increases, and increases in housing default and foreclosures.
Take this past Friday for example. My husband and I were on vacation in Acadia National Park, on Mount Desert Island, Maine. We decided to do a new hike, Hunter’s Cliff, after having hiked up Day Mountain earlier that day.
My eyes were seeing incredible beauty, but my mind was stuck in the many recent articles and headlines about auto delinquencies increasing and residential default and foreclosures climbing.
With everything going on right now, what do your next steps look like? How will we navigate these headwinds?
One thing is for sure, it will require a solid borrower outreach component in your collection strategy?
Trying not to trip when the trail gets wild
As my husband and I made our way through the woods, we encountered many exposed roots and several mud puddles to maneuver around. Experienced hikers know, you are constantly looking down to make sure you don’t get surprised and fall.
At the same time, you have to keep your eyes on the trail ahead to make sure you aren’t veering off course and that you’re not missing out on the benefits of the fantastic view that could be waiting right around the next bend.
Your collection strategy is very much like this.
You’re constantly monitoring for changing conditions in your servicing portfolio. Is it time to change course to maneuver past risk, to offer different payment options to get past-due customers back on the trail that will get them to the end of the loan lifecycle?
Let’s face it, how a customer is treated, the form or style of communication by the financial institution will either create brand loyalty or send your borrower to a competitor.
Your collections strategy isn’t just about how much the borrower can repay, it’s about understanding the why behind the missed payment. It’s about exploring repayment options, listening, understanding, and offering solutions.
But not all borrowers will respond in the same way to your collection efforts, and that’s why it’s important to think about risk resolution outsourcing, and doing so sooner than later in the process. Those of us who do this every day are experts in this process. We are very effective.
Navigating the trail to profitability when the view is not clear
It’s in times like these that expert support can make a real difference in your bottom line. After all, borrower outreach is more than just knocking on a door. There are investor requirements to meet, to say nothing of regulatory compliance.
When you’re on this path, it’s good to have a guide.
Having one of our field agents visit your borrower and deliver a letter or marketing piece is the kind of effective outreach that can be very effective. In addition, loss mitigation strategies like loan package delivery and pick-up, loan modifications, inspections, and services that require a remote notary, add convenience and demonstrate that you care about the borrower relationship.
We have best practices to share about all of this. That’s important, because making a mistake anywhere along this trail can damage the borrower relationship.
Just like my hikes last week, when the weather changes and the path is sketchy, it becomes a lot easier to trip and fall. That’s the trail we’re on today with the uncertain economy and headlines that are filling your borrowers with dread.
Our experience says that about 30% of those borrowers will put their head in the sand and not respond to your traditional outreach. That’s a good way for them to trip and fall and take you down with them.
There’s a better way. Reach out to us today and find out about all we can do to help you navigate the business path you’ve chosen to your goals.
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