Sooner or later, every company involved in credit provision faces a dilemma. Do they perform functions such as debt collection in-house or do they outsource to a specialist agency?
The decision is not a straightforward one and depends on the skillset, capacity and budget of the company. Many businesses just don’t have the internal resources or skills necessary to manage debt recovery.
The costs of dealing with debt collection in-house can be astronomical. It doesn’t make sense for most companies to invest too heavily into their collections department when it falls outside their core competency.
Outsourcing is the logical choice for these kinds of companies. Dedicated third-party debt collection companies have strategies in place to remove the burden of risk from their clients. These specialised businesses also offer the ability to scale up or down at a much shorter notice than an in-house team.
What makes specialised debt-recovery companies so effective at what they do? Strategies such as debtor-tracing, collection by prioritisation, monitoring of unpaid debt and legal enforcement, as well as sophisticated debt collection software.
The best of the best also understand the importance of retaining customers, hence their focus on CEM (customer experience management). Treating customers fairly is an often overlooked facet of the debt collection industry, although trends in the UK show this is fast changing.
By providing an end-to-end solution that makes the entire process easy to manage, outsourced companies are able to optimise collection and customer retention. Their probability of debt recovery is significantly higher than most in-house teams.
And if Europe and the UK are anything to go by, the local offshoring market is set to get even better. International developments have historically influenced South Africa in a big way, and we should see advances made in those debt recovery markets hit our shores soon. The local landscape is perfectly positioned to provide efficient, effective and cost-saving solutions in the outsourced arena, without compromising customer experience.