Have your receivables crashed and burned?
By Lisa Weiler
“Steve Austin, astronaut. A man barely alive. Gentlemen, we can rebuild him. We have the technology. We have the capability to make the world’s first bionic man. Steve Austin will be that man. Better than he was before. Better, stronger, faster.” These were the words Oscar Goldman uttered in the 1973 opening credits of The Six Million Dollar Man.
Are your receivables, like Steve Austin, barely alive? Just as you would not head to your local One Minute Clinic if you were barely alive, don’t rely on a half-hearted quick fix for out-of-control receivables. In many cases, the resurrection will involve outsourcing to a professional collection agency. Here are a few tips for rebuilding your collection processes and selecting a collection partner:
To develop a quality collection program, your internal collection process should be consistent, to set owner expectations. It should include appropriate escalation procedures as the receivables age. When engaging a third-party collector, seek a partner who works with resorts and property-management companies to establish mutually agreed upon goals, quality metrics, and service levels.
These discussions ensure that all parties understand expectations. Exchange feedback on a regular basis to confirm that your objectives are being met. Your collection partner should provide your owners with multiple payment and communication options, including call centers with qualified collection agents, online payment portals, and interactive voice-response tools.
Payment methods should include—at a minimum—credit cards, debit cards, checks by phone, mail payments, and postdated payments. For delinquent receivables, you must offer a variety of options that are convenient to the owner.
Choose a partner with a strong compliance-management system. The collection industry has never experienced the level of scrutiny that exists today. A qualified collection partner will be able to discuss clearly his/her company’s compliance program and will welcome the discussion.
A collection training program should include focus on state and federal regulations, collection techniques and negotiation, information security, and specific training related to your resort and the timeshare industry.
Within a collection agency, the compliance function should be independent of the collection function to avoid conflicts of interest. A collection department with incentives to collect money could be tempted to bend the rules on compliance. An independent function ensures an appropriate focus on collecting in a compliant manner. Choose an agency that doesn’t let the collection fox guard the compliance henhouse.
Remember that collection agents’ lack of compliance with regulatory requirements could impact you, as they are acting on your behalf. You are absolutely entitled to know and understand how they operate.
A collection partner should be active in both collection-industry and timeshare-industry trade organizations. The most common organization for third-party collectors in the U.S. is the American Collectors Association. This organization monitors legislative changes and disseminates the information to member agencies. Your collection partner also should stay abreast of issues affecting the timeshare industry by involvement in trade organizations such as TBMA.
When choosing an agency, consider your owners’ states of residence and confirm that the agency is licensed to collect in those states. Many states have collection statutes that differ from the federal laws. The agency must follow both. If federal and state laws conflict, follow the more restrictive regulations.
For example, federal law allows calls to a consumer between 8 AM and 9 PM. Some states restrict certain types of calls prior to 9 AM, so the agency must not call owners in those states earlier than 9 AM.
In recent years, data security has become a critical component of compliance. This is understandable, with the many data breaches affecting millions of consumers. Verify that the collection partner has strong information-security policies and procedures, and that it also audits its own vendors for compliance with industry security standards.
A strong and well thought out collection strategy and analytics process can create repeatable outcomes. If the actions taken on delinquent receivables are consistent over time, the results will become much more predictable. Your collection partner should have a strong understanding of your internal processes prior to referral, and develop a strategy that complements them. Optimizing performance requires analyzing data to determine how to improve cash flow from receivables as quickly as possible. This includes obtaining information from multiple sources. Has the owner filed bankruptcy? How does the owner pay other bills? Does the owner have a history of past-due payments? Has he/she moved? Does he/she have a new phone number?
Multiple tools are available to help answer these questions. The key is to analyze the information and use it effectively. Once you and your agency have implemented a collection strategy, review and evaluate key performance indicators regularly for continuous process improvement.
If your receivables are barely alive, you can rebuild them. We have the technology. You can make them better than before—better, stronger, faster.
Lisa Weiler is president of Source Receivables Management (Source RM) in Greensboro, NC. The firm is a nationally licensed collection agency serving the timeshare industry, and a member of the American Collectors Association. For a free consultation on managing your receivables, call 240-626-6003.