Better Commercial Debt Collection Services Through Preparation: An Agency Insider's Perspective5/30/2018 Do your business operations need commercial debt collection services? How do commercial debt collection services work? We all operate under the correct assumption that collections and charge-offs are part of doing business for any financial institution. Our educated business minds work through the scenarios again and again…What can I do on the underwriting and research side to ultimately reduce future charge-offs? How many late payments constitute a problem account? Can we formulate a plan to foresee collection problems on the horizon and outflank them? Is getting a Judgment the right thing to do? Commercial lenders and businesses are getting paid with Dedicated Commercial Recovery's assistance and expertise in Commercial equipment finance and leasing, merchant cash advance and working capital, commercial property lease collections, unpaid purchase order collections, balances owed for security and janitorial services, and more. If you’re owed money for your business services, we’ll make sure you get it. Now is the time to have the uncomfortable conversation about commercial debt collection services. Almost all of us know how nice it feels to be on the upswing of a sales cycle. It makes the executives and/or owners of your company have that warm, fuzzy feeling. New business is filling up the books, payments are coming in at a good pace, and things have been out of the basement for long enough that 2008 seems a distant memory… Ladies and gentlemen, preparation is one of the keys to success. Seems like the Boy Scouts have it right. Anyone out there remember The Great Depression? Very few would since it occurred from 1929 until the 1940’s. The unparalleled level of corruption and greed that plagued Wall Street for years prior had finally caught up with our country, and it caused unimaginable social and financial horrors. The U.S. Department of Labor, the nation’s unemployment rate went from a low of 3.2% in 1929 to a high of 24.9% in 1933. In addition, this rate held in the 20% or above range through 1935; then finally fluctuated around 19% in subsequent years leading up to World War II. Surviving in tough times. While it would be reasonable to assume most of us have known someone who survived The Great Depression. Do you remember what those people were like? Extremely frugal and conservative; living in almost constant fear of their financial future- telling stories of cooking and eating shoe leather, pets, all kinds of terrible things just to survive. Their sad stories even had a ripple effect on the generation or two after them. As a result there may even be some of you that have been personally touched by this. Will tough times repeat themselves? Probably everyone out there certainly remembers The Great Recession of 2008. Unemployment seemingly doubled overnight, “cutback” was the new office buzzword, and collections went through the roof. While successful businesses filed bankruptcy out of nowhere, equipment was disappearing, Personal Guarantors stopped answering their phones…just add in your own experiences. Let that sink in…it certainly was not a fun time to look at your portfolio. Therefore, don’t get complacent and let it happen again. Clients have related feeling overwhelmed, frustrated, and taken advantage of during that hard time. It is especially relevant to have a process in place you can trust prior to the next financial valley. Steps for improving debt collections There are steps that Dedicated CRI follows to help businesses with Commercial Debt Collection Services. See the article about 5 Key Steps that show How Commercial Collections Services help businesses. Keeping these 5 key steps in mind as you make decisions about the best ways to proceed with your commercial debt collections. Here some additional steps companies can follow as a general rule when formulating their approach to past due accounts: First of all- Exhaust all of your own efforts in a reasonable amount of time. Secondly - Place the account quickly with a reputable and knowledgeable commercial debt collection services company you have properly vetted. Finally, utilize all of the services a third party commercial collection agency has to offer. In conclusion, give the agency time to work things out and investigate possible assets and the financial status of the delinquent party. Determine if assets are available, know possible jurisdictional pitfalls, and then make the decision if it is prudent to invest time and money in up-front fees on the account. You will find having a plan in place and being better prepared for potential problems will help you feel more confident facing the future, and whatever peaks and valleys your company will need to cross. Here’s to better collecting! Contact Dedicated CRI to build a partnership you can count on for results. Original post was at https://www.dedicatedcri.com/commercial-debt-collection-services/
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I took some time to reflect on the challenges that 2018 brings for the equipment finance industry. My staff remains unsurpassed at spotting trends. They find opportunities to collect more for our clients in the equipment finance side of our business. The staff coupled with my experience in the equipment finance industry, has allowed us to formulate observations for 2018. Here are some pretty solid predictions for 2018. Dedicated Commercial Recovery Inc. takes a look at Top issue for the Equipment Finance Industry: Issue #1- Where’s my equipment? The number one sore spot in 2018 for many equipment finance clients will be either equipment or guarantors that go missing. Especially when there are wheels involved, such as when they are dealing with over-the-road truckers (OTRTs). Here’s why: Even in 2018, it will still be impossible to execute a replevin when they can’t locate the equipment. Which makes it impossible to initiate a lawsuit when they can’t find the guarantor. When my equipment finance industry clients complain that they can’t find their equipment or their guarantors, I usually tell them that they’re focusing on the wrong person. What’s that? The wrong person, you say? Well who’s the right person, then? Consider this: If a borrower wants to hide equipment badly enough, or a guarantor wants to hide him-or herself badly enough, then they can pretty much drop off the grid entirely. But that doesn’t mean that the rest of their friends and family and going to follow suit. In other cases, where other people fail to help, I might tell my clients that they’re focusing on the wrong technology. In our current age of social media, we professionals can accumulate analyze much more information than you probably realize, and we’re not just talking about information coming from relatives or associates. For example, have you ever seen a picture of a guarantor’s pet on Instagram or Twitter? Well 90% of the time, the location where that picture was taken is where your guarantor is located, and often, your equipment is located there as well. Now, here’s where the professionals come in: we have the ability to “heat-map” the location of where every such picture has been taken! Embracing and effectively utilizing technology will continue to be absolutely critical in 2018. Should Equipment financiers consider legal action? Issue #2: To sue or not to sue? Many of our clients are increasingly moving toward immediately securing a judgment on all of their bad accounts. My hope is that they will take advantage of some tremendous opportunities to handle their legal activities more affordably, more efficiently, and more effectively in 2018. Here are two ideas: My first idea: If they’re not already doing so, equipment finance leaders should, when allowed, consider having guarantors sign a Confession of Judgment (COJ) either before or at the time of funding. This not only provides an added deterrent to default, but eliminates the need to later file a lawsuit or invoke service of process against a guarantor. With a COJ, you’ve removed one of a guarantor’s best defenses to payment, and you’ve potentially avoided paying thousands of dollars in legal fees and court costs that would otherwise have been incurred by you–in addition to those paid while executing your judgment and filing liens, levies and garnishments. My second idea: If they’re not already doing so, equipment finance leaders should consider having their portfolios assessed for their probability of payment through the use of a scoring tool before taking legal action. The industry is awash with costly and worthless judgments that have been received by funders who believe that “going legal” should always be the first step when an account goes bad. Finding a reliable source to fully analyze what should be sued on and what shouldn’t be sued on is going to prevent you from throwing a lot more good money after bad. Furthermore, a close friend of mine who works for a creditor’s rights law firm once told me that almost 25% of consumers and businesses who are sued by creditors end up feeling forced to file for bankruptcy protection within 12 months of funding. So, right off the bat, you might lose a quarter of your portfolio by “going legal” as a standard practice, which makes the selection of which debt to sue on critically important to the financial health of your business. How can Equipment Financiers begin awkward conversation with guarantors? Issue #3: They don’t want to talk to you. ever!!! The stress, stigma, and family drama that guarantors facing a financial crisis endured in 2017 will remain in 2018, and the last person that they will want to talk to will remain you–followed closely by anyone and everyone else who is connected to their defaulted obligation. Now, for an often overlooked, but extremely important point: Notice that I have not once in this article referred to these individuals as “debtors.” This is very deliberate on my part. Understanding the psychological state of someone who is facing a financial crisis is a critical component of the way that we operate our business, and because we are one step removed from the actual funder, we are able to treat those in default with more respect, integrity, understanding, and patience than they might otherwise receive from someone who was more involved with the actual funding decision. Furthermore, we find that a large portion of those who have been placed into collections with us will tend to respond incredibly well to a fine-tuned communication campaign that offers them options rather than ultimatums. In contrast, we have also found that having had even one past, negative experience with a debt collector or an in-house recovery agent will dramatically reduce an individual’s willingness to pay anything to anyone–ever. So, if you currently employ an in-house collections strategy, then you must really pay attention to what’s going on in your call center. Given the sensitivity around collections in general, ensuring that your team operates with respect, integrity, understanding, and patience will both lower your reputational risk and increase your brand value. And, as I am sure you are aware, in today’s social-media-frenzied population, it takes only a few negative digital comments in the digital universe to bring a firestorm to your door. What regulations may impact commercial collections? Issue #4: State regulations and the CFBP… To date, the commercial collection market has generally not fallen under the rules of the federal Fair Debt Collection Practices Act (FDCPA.) However, even though Richard Cordray has resigned and the current administration is working to dismantle, or “fix,” the Consumer Financial Protection Bureau (CFPB), we must still approach everything that we do in 2018 with caution. We have probably all heard stories about collection agencies or companies handling their own recoveries that have landed in hot water with their local or state regulatory agencies, or been slapped with an enforcement action from the CFBP. The compliance function will continue to be a necessary survival component for in the collections industry in 2018, and those companies that have loose compliance standards–or even worse, error-laden compliance platforms–will put their entire organization in peril. Remember: Going through each and every one of your processes, documenting them, and developing corrective action plans if needed, are all critical duties before you find yourself face-to-face with a regulating authority, and it only takes one complaint to get on their radar. What can Equipment Financiers do when a guarantor dies? Issue #5: Death. Everyone’s a customer… You wouldn’t believe how many organizations we see that still have no protocol for handling “deceased” accounts, other than to close the file. This will almost certainly continue to be an issue in 2018. Given the ever-increasing “bubble” of baby-boomers who are now entering retirement age, equipment providers are inevitably going to end up with deceased guarantors. Knowing when to, and how to, file claims against estates and trusts is therefore going to continue to be an absolute must. So, do you know how to work effectively with probate attorneys while still truly respecting the sensitivities that are involved in estate recoveries? Those who do can dramatically improve their bottom line, and it’s easier to do than you might think. For example, there are several companies that handle higher-volume estate recoveries on a national level. However, even if your volume of estate issues is relatively small, you can still either research the process yourself in order to develop an internal mechanism, or seek out collections agencies that have already done all of the legwork for you. Remember, there’s a very narrow window of opportunity to recover estate debts, and waiting until its too late can result in both irreversible and negative financial consequences for you. The Equipment Finance Industry Changes. Issue #6: Stay Educated!!! Lastly, and perhaps most importantly, in 2018 and beyond you will need to stay educated by monitoring industry trends and both current and upcoming regulations. I, and my all-important staff, try to continuously monitor industry insider websites, state and federal regulatory bulletins, and CFBP releases–even if they are–today–only concerned with consumer issues. Staying informed in this way not only allows us to keep our clients and ourselves out of harm’s way, it also allows us to develop strategies that we can deploy in the future in order to ensure continued profitability. When we discover something that our clients haven’t yet heard about, and then share it with them, the feedback that we often get is something along the lines of “Thank you so much for bringing that to our attention!” Then, they share the information with their compliance personnel so that they, too, can stay informed. Whether you’re a vendor, or your niche is equipment finance, capital investments, factoring, MCA’s, micro loans, micro financing, or recoveries, staying “plugged in” to the current state of affairs and the chatter about the future can mean the difference between being either well prepared or cleaning out your desk after an embarrassing board or investor meeting. I hope that you have found these thoughts to be helpful, and I wish you all a safe and prosperous 2018! Shawn Smith – CEO of Dedicated Commercial Recovery Inc. Your partner in Commercial Recoveries Article originally published in NEFA Magazine Jan/Feb issue Better Commercial Debt Collection Services Through Preparation: An Agency Insider’s PerspectiveDo your business operations need commercial debt collection services? How do commercial debt collection services work? We all operate under the correct assumption that collections and charge-offs are part of doing business for any financial institution. Our educated business minds work through the scenarios again and again…What can I do on the underwriting and research side to ultimately reduce future charge-offs? How many late payments constitute a problem account? Can we formulate a plan to foresee collection problems on the horizon and outflank them? Is getting a Judgment the right thing to do? Commercial lenders and businesses are getting paid with Dedicated Commercial Recovery's assistance and expertise in Commercial equipment finance and leasing, merchant cash advance and working capital, commercial property lease collections, unpaid purchase order collections, balances owed for security and janitorial services, and more. If you’re owed money for your business services, we’ll make sure you get it. Now is the time to have the uncomfortable conversation about commercial debt collection services. Almost all of us know how nice it feels to be on the upswing of a sales cycle. It makes the executives and/or owners of your company have that warm, fuzzy feeling. New business is filling up the books, payments are coming in at a good pace, and things have been out of the basement for long enough that 2008 seems a distant memory… Ladies and gentlemen, preparation is one of the keys to success. Seems like the Boy Scouts have it right. Anyone out there remember The Great Depression? Very few would since it occurred from 1929 until the 1940’s. The unparalleled level of corruption and greed that plagued Wall Street for years prior had finally caught up with our country, and it caused unimaginable social and financial horrors. The U.S. Department of Labor, the nation’s unemployment rate went from a low of 3.2% in 1929 to a high of 24.9% in 1933. In addition, this rate held in the 20% or above range through 1935; then finally fluctuated around 19% in subsequent years leading up to World War II. Surviving in tough times. While it would be reasonable to assume most of us have known someone who survived The Great Depression. Do you remember what those people were like? Extremely frugal and conservative; living in almost constant fear of their financial future- telling stories of cooking and eating shoe leather, pets, all kinds of terrible things just to survive. Their sad stories even had a ripple effect on the generation or two after them. As a result there may even be some of you that have been personally touched by this. Will tough times repeat themselves? Probably everyone out there certainly remembers The Great Recession of 2008. Unemployment seemingly doubled overnight, “cutback” was the new office buzzword, and collections went through the roof. While successful businesses filed bankruptcy out of nowhere, equipment was disappearing, Personal Guarantors stopped answering their phones…just add in your own experiences. Let that sink in…it certainly was not a fun time to look at your portfolio. Therefore, don’t get complacent and let it happen again. Clients have related feeling overwhelmed, frustrated, and taken advantage of during that hard time. It is especially relevant to have a process in place you can trust prior to the next financial valley. Steps for improving debt collections There are steps that Dedicated CRI follows to help businesses with Commercial Debt Collection Services. See the article about 5 Key Steps that show How Commercial Collections Services help businesses. Keeping these 5 key steps in mind as you make decisions about the best ways to proceed with your commercial debt collections. Here some additional steps companies can follow as a general rule when formulating their approach to past due accounts: First of all- Exhaust all of your own efforts in a reasonable amount of time. Secondly - Place the account quickly with a reputable and knowledgeable commercial debt collection services company you have properly vetted. Finally, utilize all of the services a third party commercial collection agency has to offer. In conclusion, give the agency time to work things out and investigate possible assets and the financial status of the delinquent party. Determine if assets are available, know possible jurisdictional pitfalls, and then make the decision if it is prudent to invest time and money in up-front fees on the account. You will find having a plan in place and being better prepared for potential problems will help you feel more confident facing the future, and whatever peaks and valleys your company will need to cross. Here’s to better collecting! Contact Dedicate Commercial Recovery Inc to build a partnership you can count on for results. Original article published at Dedicatedcri.com |
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