Collections

What is Debt Collections in lending?#

Collections or Debt Collection is the process of retrieving the money that has been lent to borrowers by the financial institution. The basic strategies for collection are enabling easy repayment, ensuring flexibility in repaying, sending timely reminders, and monitoring the portfolio.

Lenders generally work with collection agencies that contact defaulters in various ways, including in-person to nudge them to make timely repayments.

The collection process often creates several hurdles for lenders. The process directly affects the gross recollected amount of the lender’s portfolio. A smooth, data-driven process ensures lower delinquency and reduced collection costs and high customer satisfaction. Collections are a crucial part of the lending lifecycle. A poorly implemented collections programme can put an end to a credit programme.

Collections are a crucial part of the lending lifecycle. It can make or break a lending programme.

Collection strategies#

Manual outreach - Manual Outreach which has for long been the go-to collections method for lenders, is expensive and time-consuming. Collections agents place hundreds of calls, send emails, and show up to speak to borrowers in person - and after all this effort, money is recovered only 20% of the time, at best. Apart from the obvious time and resource cost, this aggressive form of debt recovery results in soured relationships, ensuring that the borrower never works with that particular lender again.

Manual outreach for collections has the following inefficiencies -

  • High costs
  • Time intensive
  • Relatively ineffective
  • Sours relationships

Technology-driven collections - Leveraging technology, data, and a dash of emotional intelligence to create customized repayment arrangements. There are several ways to do this.

Here are some tech-driven strategies -

  • Leverage real-time cash-flow data - Leverage real-time data on the borrower’s financial position such as account balance, cash-flow, new loan obligations, other upcoming EMIs.
  • Identify risky borrowers in advance - Identify users who are at risk of non payment prior to the due date
  • Prioritise collections resources - Intelligently allocate collection resources by segmenting borrowers based on real-time data on the borrowers financial position.
  • Tailored Communication - Tailor the message, channel and timing of communication to the borrowers.

Why opt for technology-driven collections?#

  • Helps identify high-priority accounts
  • Helps determine the right communication
  • Enables optimization of collections resources
  • Facilitates mutually beneficial resolution with risky borrowers

How FinBox enables easy repayment#

  • eNACH integrated for auto debit of EMI amount. NACH presentation is done on the due date of repayment.

  • Notification Reminders are sent to borrowers as the due date approaches.

  • Various modes of repayment like eNach, phyical mandate, payment gateway, is integrated within app.

  • Repayment tenure and date is felxible. Users can pay EMI before due date.

  • We have a calling team to remind borrowers for repayment of EMI.

    FinBox CollectX

    FinBox CollectX is an intelligent, data-driven collection prioritisation and early warning sysytem - helps lenders continuously assess borrowers' ability to repay loans with real-time analysis of their digitally active credit portfolio. It enables them to take empathetic remedial measures without alienating customers with predatory collection parctices. It help lenders optimize resources for maximum collection.

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