Quick Overview
Hey folks,
As we kick off the new year with fresh energy and new goals, it’s the perfect time to bust some collection myths floating around that might be slowing you down.
So, grab a cup of coffee and read along to see how many of these can you relate to.
Myth #1 Only Delinquent Accounts Need Collections.
Collection communication is a reactive process that is triggered when an account becomes overdue. For credit unions and community banks, recovery is the only priority, and proactive efforts to prevent delinquency are unnecessary.
But, this is far from the truth.
The Reality: Modern collections strategies are as much about prevention as they are about recovery. By engaging proactively with members before their accounts become overdue, credit unions and community banks can reduce the likelihood of overdue payments before they even occur.
How Proactive Collections Works?
- Proactive Identification: Real-time or predictive analytics can help you identify accounts that show signs of potential delinquency.
- Timely Notifications: Proactive and timely nudges for high-risk accounts and accounts that show early signs of delinquency about upcoming payments can prevent delinquency in time.
- Financial Counselling: Send educational content through text campaigns to help members understand their payment schedules, create budget plans, and make informed financial decisions, can bring down the risk of delinquency.
Myth #2 Automated Collections are Impersonal.
Automated collections compromise a member-first approach – it lacks the personal touch needed to build strong trusting relationships and doesn’t account for the unique needs and challenges of each member.
But, it’s a complete misconception.
The Reality: Automation doesn’t take away the personal touch, on the contrary, it can help credit unions and community banks communicate at scale and create convenience for the staff while still being empathetic, personal, and member-focused.
How Automated Collections Can Be Personal?
- Customized Messaging: Send messages that align with your credit union’s tone of support and reflect each member’s unique situation using customized templates. For example, you can address members by name, include payment amounts or due dates, and provide helpful resources like payment links or options for support.
- AI Reminders: Take personalization a step further by using AI & Machine Learning (ML) to determine the best time to send messages – when members are most likely to see and act on them. This approach goes beyond filling inboxes – it shows members that they’re valued and that your institution cares about their needs.
- Multi-language Support: Send messages in the language preferred by members is like giving access to a native-speaking agent that makes members feel understood and familiar. This small change can go a long way in helping you build trust and loyalty you so look forward to.
Myth #3 Collections Hurt Member Relations
Collections are only about extracting money, hence it is bound to strain the relationship between financial institutions and their members. Persistent phone calls, letters, or legal notices can create a sense of pressure, stress, and resentment among members, especially those facing financial difficulties.
In reality, that’s just not the case!
The Reality: Traditional methods – such as phone calls and impersonal letters – often create frustration, leaving members feeling like a number rather than a valued part of the institution. The reality is that collections are not about demanding payments but rather about working together with your members to find a solution through tough times.
How to Strengthen Member Relationships Through Collections?
- Empathetic Communication: Use the right phrases and resources to show that you understand your members’ situation. With custom text templates, you can communicate in a non-intrusive, respectful, and empathetic manner that your members will appreciate.
For example, try a message like: “We’re here to help you navigate this. Let’s find a solution that works for you.” – making members feel supported, not pressured.
- Flexible, Member-Centric Payment Solutions: Support members facing financial conflicts with flexible payment plans, so they don’t feel overwhelmed and can stay on track with their payments. Embed a payment link directly in your messages to allow your members to quickly settle their debts on their own terms.
- Proactive Support: Offer financial advice proactively to make your members feel valued and encourage healthy financial habits. Leverage predictive analytics to quickly identify members with delinquency history and set up targeted 1:Many texting campaigns to provide timely financial guidance and resources to these members.
Myth #4 All Collections Calls Must be Made by an Agent.
All collection work needs to be handled by human agents to be effective. Personal touch and empathy of a human are important to successfully manage delinquent accounts and maintain positive relationships with members.
But, that’s just one side of the coin!
The Reality: We agree 100%, only human interactions can provide the level of empathy and understanding your members need during sensitive financial conversations. However, many routine collection tasks don’t. Saving some of the time and energy spent on routine tasks can help your collection agents focus on the accounts that need their attention most.
How to Streamline Collections with Automation?
- Automate Routine Tasks: Routine, manual tasks – like sending payment reminders, looking at overdue accounts to notify them, and more allied tasks – can be easily automated with text messaging.
- Self-Service Payment Options: Send payment links via text will give your members the freedom to access their accounts and make payments at their convenience – with no agent intervention needed.
- Focus on High-Risk Accounts: Automate routine collection tasks and allow human agents to dedicate their time and resources to handling high-risk accounts, ensuring prompt and effective resolution.
Myth #5 You can Only Collect During Business Hours.
Collections happen on phone calls made by agents working standard 9-to-5 shifts. Credit unions’ and community banks’ staff have a narrow timeframe to quickly engage and serve their members
But, this is not the full picture.
The Reality: Modern collections tools have changed the game. Credit unions and community banks can now facilitate collections anytime, anywhere – especially during off-hours, when members are more likely to be available. This helps improve response rates and ensures a more respectful, smoother collection process.
How to Enable 24/7 Collections Effectively?
- Pay Anytime, Anywhere: With secure, self-serve payment options, your members can use digital payment options to pay at their convenience – on a weekend and in the middle of the night.
- 24/7 Member Support: Members go through a long wait to get help with their payments or get an issue resolved. Leverage AI chatbots to resolve routine inquiries in real-time, even outside business hours to quickly answer questions, and guide members through payment details, ensuring they receive all the support to settle their debts promptly.
Looking Ahead with Eltropy
Breaking free from the outdated myths surrounding debt collection isn’t just about improving processes – it’s about reimagining what’s possible with digital innovations to deliver a frictionless and pleasant experience for both members and staff.
Eltropy’s Collections 2.0 suite is here to help.
Our seamless, AI-driven collections solution is designed to help Credit Unions and Community Banks carry out member-centric collections in a private, empathetic, and non-intrusive way. With Eltropy, you can enhance recovery rates, boost agent productivity, and improve cash flow – all while turning every interaction into an opportunity to build stronger member relationships with the right tools and strategies.
It’s time to break through the noise, debunk the myths, and create a fresh collections experience – one that empowers both your team and members to thrive. Let us connect!