There is no doubt that technology is advancing in such a way that it is resulting in many businesses being able to save significant amounts of money; and so it stands true when it comes to debt collection.
For those of you who may not be aware of this advancement in technology, automated debt collection services are new phenomenon that allow organisations with a considerable number of debtors to chase to efficiently and effectively perform this task through an automated telephone call process.
It works something like this: the list of debtors or late payers is uploaded as a CSV file, the auto-dialler then proceeds to call each and every one these in rapid succession. The automated message will introduce the purpose of the call (first call is usually a friendly reminder that payment is overdue) and then offer the recipient a range of options including
- that the debtor has already paid in the last couple of days
- that they intend to pay within the next 5 days
- that they would like to pay now via credit card (which automates a call diversion to your call centre for credit card payment) or
- that they have difficulties and need to speak to your consultant now (which again triggers a diversion to your call centre).
This automated debt collection services are saving companies tens and even hundreds of thousands of dollars. Let’s take a look at how.
The best way to explain this is by using a simple case study example. For instance, an organisation that has monthly subscriptions or payment requirements from their customers is a prime example. In many cases, these organisations would have approximately 1000 late payers as a minimum. Based on some simple assumptions such as the number of calls that can be made in one hour, the call costs, labour costs, infrastructure costs etc. it is easily calculated down to a cost per call. It is not unusual for the debt collection process cost analysis to identify each call to cost a minimum of $3.35 per call. Based on a call rate of 25 calls per hour, 1000 calls is going to consume 40 labour hours and this is not taking into account the constant reality that getting through to the individual can require up to four repeat calls. So it is very conceivable that this process can take over one week simply to get through the volume of debtors.
When we look at the auto-dialler process, which has the capacity to call up to 5000 calls in one day, we immediately get a perspective that with the call cost of the auto-dialler being as low as $1.26 (depending on volumes), not only do we have a much lower actual call cost but the effect of immediately being in communication with the debtors in one day, results in collections flowing through at a much faster rate. The automated debt collection services process are therefore less of a real cost but also has the effect of collecting at a faster rate.
Over an annualised period, the above example produces a saving of $25,080.00 each year. This is significant to any organisation however when the numbers are extrapolated, then the savings compound greatly to a point where 10,000 calls per month translates into a saving of in excess of a quarter of a million dollars. In relation to speed of collection and the impact on the automatic debt collection services from the auto-dialler, where monthly outstanding debtors totalled $1,000,000.00 and the process resulted in an average of collecting the funds say 5 days sooner, savings on interest and outstanding debtors alone would result in tens of thousands of dollars each year.
Naturally, for each organisation, the cost benefit analysis will differ depending on your debt collection process, numbers, time frames etc. so the only real way to effectively measure whether an automated debt collection services are right for you is to crunch the numbers. However a rule of thumb benchmark will usually show that the breakeven point is around the 750 calls per month range.