What is Integrated Resourcing?
The debt collection industry faces major obstacles to profitability, including declining revenue due to competitive contingency rates and rising costs related to payroll and compliance regulations. Revenue is a major concern with a decrease in commission and collection rates. The ACA 2014 Benchmarking Survey shows that the median commission rate stood at 25.6% while the 2017 Ernst & Young report indicates that commission costs fell from 18.1% to 13.9% between 2013 and 2016, a decrease by more than 12% in a short time [1].
The 2014 ACA Benchmarking Survey also illustrated challenges with recovery rates at 13.1%, while Kaulkin Ginsberg 2020 State of the Industry Report explained that recovery rates had decreased to 11%, a clear downward trend [2]. These changes demonstrate that it is imperative for debt collection companies to pivot quickly and adopt cost-cutting measures to maintain profitability.
Integrated resourcing solves these problems by providing the following benefits. First, he finds the talent to serve collection files from a secure offsite remote location. This talent is integrated into a company’s core team to deliver high collection rates in strict compliance with collection laws while generating significant cost savings.
How does integrated resourcing apply to collections and recovery?
The collection industry must adapt to customers demanding lower rates to remain competitive. They must provide the same services for less revenue with an average account balance of only $574 [3]. To be effective, agencies need to assess their overhead costs, including payroll, office space, and expenses such as hardware and software to perform collections. Integrated resourcing can help agencies take advantage of lower provident rates and stay profitable through talent sourcing and integration with the core team. Employees work in a secure off-site location to drive successful collection rates while complying with all collection laws while achieving significant overhead cost savings.
Who is a good candidate for integrated resourcing?
Debt collection companies are ideal customers because the built-in resources solve the problems of increasing labor costs, compliance, HR bandwidth and resources to perform collections. Staffing needs require a large pool of financial resources and a solid basis to ensure revenue collection. HR responsibilities present a significant commitment to managing HR issues and staff onboarding, while budget shortfalls and lack of office space present a challenge for growth opportunities.
Together, these issues demonstrate a strong need for resource integration. Integrated Resourcing finds quality talent dedicated to delivering an agency’s collection rates while adhering to all collection laws. It offers the added flexibility of a secure remote workforce integrated with a central team that generates substantial cost savings.
What are the risks for collection agencies under the FDCPA?
We are all fully aware that FDCPA complaints and lawsuits are a major concern for creditors working on consumer accounts. In 2021, the Federal Trade Commission (FTC) resolved three FDCPA cases prohibiting 17 companies from engaging in future debt collection practices. That same year, the FTC issued 4.86 million refunds to consumers it said had been defrauded by debt collection agencies. [4].
However, the specific risk under the FDCPA is the same regardless of where an agent is located. Abusive debt collection practices occur when agents fail to follow company procedures and compliance requirements. This is not a risk unique to remote staff work, and we are not aware of any data suggesting more FDCPA complaints produced by remote agents. Additionally, remote work is monitored by the same methods as on-site work: call tracking, KPI reviews, and file auditing. Resource onboarding addresses this challenge through candidate sourcing and workplace safety measures.
Can integrated resourcing reduce compliance risk?
Yes. Agents working on files at an integrated secure remote site while following the same policies, procedures, and business practices limit compliance risk as long as training adequately covers compliance. Often, compliance is actually improved simply by using integrated resources, as the infrastructure offered exceeds what is available at agency headquarters. Where an agency may run into difficulty is when the topic leading to compliance issues is not covered in the agency’s training materials. If compliance training is inadequate, the risk is not unique to remote work and can be addressed by improving training practices and materials.
Integrated resourcing reduces the risk of non-compliance:
- Through a candidate search that identifies qualified personnel to join the core team of collectors and produce the collection rates a business is accustomed to with substantial cost savings.
- Provides a secure workplace with on-site procedures to ensure employees follow quality control measures to protect customer information. These measures include prohibiting the use of personal mobile devices and electronic devices.
- Integrated training to cover compliance. Agents are integrated into the core team and follow the same policies and procedures.
- Monitoring and recording are available to ensure agents provide quality service in accordance with training protocols and company procedures.
What are the risks of integrated resourcing?
The two potential risks associated with integrated resourcing include quality control and compliance.
Built-in resources have the core skills needed for successful collectors. It’s not like business process outsourcing where agents can be shared across multiple customers and measured on service levels. Embedded resources are part of the agency’s core team. Top talent performs core functions (i.e. collections) as they would from head office. When a company provides the proper tools and training, the issue of quality control becomes non-existent. Meanwhile, compliance is highly dependent on an agent’s desire to succeed. Integrated resourcing selects qualified candidates who are knowledgeable, skilled and dedicated to revenue recovery. Integrated resourcing offers agencies the opportunity to acquire new talent to fill key production roles such as team leader, training, compliance and supervision where it was previously prohibitive to further improve quality control and compliance.
In the collections industry, we can only anticipate that costs will continue to rise, while revenues will face major headwinds. It is imperative that businesses quickly adopt strategies to deal with these changes so that they can succeed. Companies that lack the infrastructure and resources to survive, let alone be profitable in an increasingly competitive environment where lower commission rates and stricter compliance regulations prevail, are particularly vulnerable. Integrated resourcing provides the answer to these issues with trained personnel working in a secure remote location and integrated with the central business team. Additional performance monitoring measures are available to address quality control and compliance issues and increase productivity. This approach offers collection rates a business is used to, in compliance with all laws, and substantial cost savings.
Footnotes :
[1] Ernest and Young. The Impact of Third-Party Debt Collection on US National and State Economies in 2016. Pg. 2; AAC International. (2014). 2014 Agency Benchmarking Survey. p. 19
[2] AAC International. (2014). 2014 Agency Benchmarking Survey. p. 19.; Kaulkin Ginsberg, State of the Industry Report 2020. AAC International.
[3] Kaulkin Ginsberg, State of the Industry Report 2020. AAC International.
[4] Federal Trade Commission. “FTC Reimbursed $4.86 Million to Victims of Abusive Debt Collectors in 2021” 2021. Federal Trade Commission. washington d.c..
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