Some of you may remember the “good ol’ days” when files were kept in file cabinets that contained handwritten records and notes. When files were hand-delivered to collection agencies by courier and then filed into a queue cabinet and each time a call was made the file would be pulled out of the cabinet and a scribble of a note would be hastily written onto a card to record what occurred during the call. Once complete, it would be refiled to call again or manage as a payment arrangement.
A server room in the 1960’s from the City of Toronto Archives (Fonds 1257) shows computing power you can now have in the palm of your hand.
It wasn’t very long ago that this was the standard operating procedure for collection agencies – even into the late-nineties many “mom and pop” operations still ran their operations this way. But over the last twenty years we have seen a terrifyingly fast progression in the way agencies store records.
Agencies now can collect years of history for each account or debtor and the collection process is performed at high volume with proprietary statistical analysis and modeling. Now before I lose you with this tech jargon, let me just quickly explain what this all entails. It’s actually the same process we see played out in sports these days – statistics will help a basketball coach decide if he or she should foul a shooter or legally defend a shot attempt (remember Hack-A-Shaq?) or whether a baseball manager is better off walking a batter than challenging him at the plate (Barry Bonds anyone?). It starts with an agency’s experience with the industry they are working for. Just as a coach brings years of experience with a certain player, team or strategy, so too does an agency learn from its years of experience working for that client in a particular industry. Once this experience transitioned into electronic storage of information (i.e. notes on the subject and statistics about their patients or customers), the amount of information it could gather increased and its ability to quickly locate this data increased even more. So this familiarity with the client’s process and their industry in general is both crucial in its ability to locate pertinent data as well as when it begins to look at these numbers and criteria to decipher what they actually mean.
Simply put, once all of the data is on the table, it begins to take upon a life of its own and each piece of data tells a piece of the story that contributes to the overall narrative. This is no different than a coach using statistics to gain an edge in strategy. With collections the use of historical information and consumer statistics – from demographic information and credit history to previous account resolutions and employment history – creates a set of criteria that, when used effectively, can greatly increase overall productivity and allow the agency to identify the accounts that are worth spending the most time on.
For collection agencies it is crucial to be able to capture this information effectively and to call upon it and relate it to other criteria that can help direct a cohesive and profitable strategy. It is also extremely imperative to be able to act creatively within its data to find and analyze new opportunities and strategies since this process is still in its nascent stages and must be adapted on an ongoing basis. This is one of the reasons we utilize an in-house database design team that can translate these new procedures into our proprietary software. This constant improvement to our process allows us to quickly adapt to changing statistics and behavior in a way that most agencies simply cannot. So, for whoever you choose to work with, always remember, the efficacy with which an agency uses its statistical resources and how quickly they can adapt to them as they change will directly affect your own bottom line.