5 areas to consider when scaling your collections operation

For over 25 years, we've been transforming collections and recoveries across the world and helping to deliver better customer and client outcomes. We've worked with organisations of all sizes, from huge multinationals and large domestics with mature collections operations, to growing companies often with nascent ones.

I love supporting organisations with their growth, and this article is the first in a series where we will delve into how you can effectively scale your collections and recoveries as you expand.

What issues are growing organisations facing in collections?

Your focus has probably been on customer acquisition and growth to this point. However, as your portfolio matures, there is a natural need to focus on collections as the credit lifecycle plays out.

Doing so is necessary as customer bases, regulatory obligations, and operational complexities all increase, especially with the backdrop of more customers falling into default as cost-of-living and COVID buffers are depleted. From our work with clients in this position, we're also seeing collections increasingly becoming a lever to improve the bottom line, ensure long-term sustainability and deliver better outcomes.

One of the challenges you may be facing is how to handle these changes effectively without an expert team or the bandwidth.

What should you focus on?

In our experience, the best approach involves a combination of strategic planning alongside investment in people, processes, and technology.

Here's an overview of the key areas to look at:

• 1. Review your collections capabilities as a whole

Take a look at all areas of your operation including strategy, technology, operational effectiveness, governance and staff to identify gaps to industry best practice and outline your target state. Stress test these capabilities in line with your growth ambitions and identify risks to maintaining customer service levels, KPIs and collections performance.

2. Have a clear collections technology roadmap

Whether you're looking to enhance or build your own system, or buy from a software vendor, it's important that you understand market best practice, how emerging capability can add value, as well as have the right roadmap in place to take advantage of functionality and use the technology to set you up for future success.

3. Focus on customer experience alongside vulnerable customer identification and treatment

It's essential to systematically capture interaction data and build tailored collections and contact strategies to help your customers resolve problem debt and provide vulnerable customers and with the relevant support. This involves looking closely at customer journeys, segmentation, product crossover, contact channels, and much more. This will enhance your customer experience and achieve better outcomes whilst complying with relevant regulations including Consumer Duty, Breathing Space, and CONC.

4. Optimise use of data and analytics

One of the best ways to improve your collections performance and bottom line is to ensure that you're using both internal and external data sources and using advanced data analytics to better segment your customers and select the right treatment paths. Review your end-to-end data strategy and use of third party data to enrich your understanding of the customer, use predictive analytics and AI to hyper-personalise the collections experience.

5. Consider flexible resourcing

There are many reasons why even large organisations bring in external partners for help with specialist areas of collections, but it's especially key for teams where you don't have the resource in-house and it doesn't make sense to hire for short-term needs. You may consider utilising flexible resourcing for things like reviewing your target operating model, debt sale, making technology improvements, or regulatory reviews, for example.

Taking these steps will ensure that your organisation is better equipped to handle growth, improve customer outcomes, and reduce operational risks.

arum has a global team of specialists in collections and recoveries that can assist you with your growth journey in any of these areas.

If you're not sure where to start, or would like an independent validation of your strategy, we'd love to offer you a free one-day review workshop that looks at your entire collections operation, followed by a report of our findings and recommendations. This will help you to identify and prioritise areas to focus on as you scale.