A Collector’s Work Method and Tasks in a Multifinance Company
What comes to your mind when you first hear of a collector’s task?
The imagery of a debt collector who comes to see the client is one of the most familiar images of a collector. Not to mention, stories of debt collectors are embellished with details about them terrorizing the client’s relatives or forcing a fight with the clients for the sake of collecting debts from the clients.
However, behind these dramatized stories, the important role of a debt collector is nonetheless cannot be underestimated. Now let us see the following explanation.
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Collectors’ Role Based on Their Work Methods
Generally, collectors’ tasks are divided into three different levels based on their work methods.
This task is given to collectors who work in the back office and not in the field. They only have to remind the due date to the clients through telephone. Because they serve as reminders, the task of desk collectors are oriented to customer service, so they have to use a more professional and well-mannered communication style.
They will be sent on to the field when the customers fail to pay their due debts after some time. Collectors will visit these customers to figure the customers’ reason behind the payment failure and their current financial status.
Field collectors will persuade the customers to comply with the customers’ obligations as a client. They also will point out the consequences of not paying the debts immediately after the due date has passed.
Moreover, the collector will also provide a new deadline to the customers to pay the remaining debts, usually takes up about seven days. This deadline is related to the collectors’ target that they should fulfill monthly.
Customers can also pay their debts immediately to the field collectors. Therefore, the collectors are obliged to provide official proof of payment to the customers on this occasion and not merely receipt.
If some time has passed since the customers received their deadline without any payment whatsoever, the multifinance company will assign remedial collectors (or bailiffs) to see the customers. The remedial collectors can come from the company’s internal departments or from external parties, based on the complexity of the situation. This group of collectors will confiscate properties that serve as collaterals when the customers applied their loan requests.
When the remedial collectors are working, they will offer different treatments based on the customers’ response to their responsibilities. If the customer comprehends the situation well and is willing to submit the collateral as per the previous agreement, the collectors will act politely to the customer.
On the contrary, the collectors will use force if the customer is unwilling to show good faith, such as deliberately leaving calls on hang, running away, and hiding to avoid persecution. When using force, the collectors will resort to intimidation and forceful confiscation other than processing the situation with the authorities.
However, the collectors must not abuse the authority and force that they possess so that they will not be subject to multiple criminal offenses, such as damaging properties and smearing reputation.
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Skills of a Capable Collector
A collector has to be adept in communicating, negotiating, and analyzing things during their work hours. A collector also has to be able to work under pressure, while maintaining composure and situation during work time. Furthermore, a collector has a set of targets that should be fulfilled every month. In the same time, a collector needs to build a trusted image whenever the collector is meeting the clients.
The harsh and stern image of a collector is not entirely correct in its regard. This less than ideal image needs to be changed by showing that collectors can be friendly consultants who can offer solutions to every single problem the customers may face. This change of image can be started from using neat clothes and being humble to the customers and everyone around the collectors.
Fraud by irresponsible debt collectors
Debtors who experience bad credit or fail to pay debts on time can cause misunderstandings with the credit service provider. So that this does not happen, debt collectors will be assigned by their superiors to contact the borrower in any way so that they immediately pay the debt. The goal is for companies to recover financial support for their business continuity. Unfortunately, there are some debt collectors who are still illegal by law.
Irresponsible or illegal debt collectors are also often a scourge for borrowers who are in arrears or bad credit. Illegal debt collectors also often act violently both verbally and non-verbally. Usually this occurs when the debt collector does not receive payment of the debt or come to an agreement with the borrower. In addition, debt collectors can also collect profits and profits from these credit payments, they can carry out acts of extortion and threaten to confiscate assets and valuables belonging to borrowers.
How to monitor the collectors’ performance
Finance companies and other financial service providers need to provide direction and training for collectors to minimize potential risks. In addition, it is also important to give briefings so that in carrying out their duties, debt collectors do not take deviant actions and can maintain good relations between the company and their customers so that financial losses can also be reduced.
To ensure that collectors will not manipulate (falsify/misuse) data for personal gain, here are ways that can be done to prevent it.
First, companies can require and urge debt collectors to mark their positions during business hours. Since this is a direct order from management, collectors who do not change their GPS location during work will be penalized. This step can serve as a start for the company to track the position of collectors and monitor them during their work. This method can also help companies determine whether the collector meets debtors or credit borrowers in public places and not in suspicious or illegal places
Second, the company can assign people to monitor the performance of collectors in the field, so that the company can get actual information about the performance of the collector at any given time. Collector is a profession under the law, therefore, companies can have supervisors who monitor their performance and prevent any form of abuse of authority that may occur. Therefore,
it is hoped that the possibility of collectors to act illegally will be smaller when meeting with credit borrowers to collect debts.
Definition and how to calculate credit score
Credit score is a scoring system used by banks and other financial services that serves to determine the eligibility of prospective customers or customers in applying for credit. Financial service providers can determine a credit score based on how the customer’s transaction history, financial condition, type of work, home status, family dependents, and more.
The lowest credit score usually starts from 300, and the highest number is 850. If the customer or borrower has a low score, this customer can be considered as someone who often makes customer credit payments late and is undisciplined. Of course, this score will be considered by the bank in the future, so that it can make it difficult for customers to get new loans.
A variety of different ways and methods are used to calculate a credit score. This method is usually based on numerical calculations and a weighting system to assess various types of criteria. The details of how the calculation and the formula for calculating the credit score are known only to the service provider itself. The accuracy of the results of the credit score will depend on the criteria and suitability for the purpose of the credit. In addition, the tools and methods used will also affect the results of the credit score calculation.
The following is the division of credit categories based on their score:
- Score 1 (Exceptional), which is a borrower or customer who is never in arrears and always pays credit loans on time until the loan is paid off.
- Score 2 (Very Good), namely borrowers who are in arrears on credit payments for 1-90 days.
- Score 3 (Good), namely borrowers who are in arrears on credit payments for 91-120 days.
- Score 4 (Fair), namely borrowers who are in arrears on credit payments for 121-180 days.
- Score 5 (Bad), namely borrowers who are in arrears on credit payments for more than 180 days
Many things can affect the high and low credit score. However, below are the five main factors in calculating a credit score according to FICO:
- Payment history: The history that is often used by lenders is 35% of the credit score and timeliness of the borrower in paying credit.
- Credit utilization: This calculation is usually derived from 30% of the credit score and it refers to the amount of money or property owned by the borrower. This considers the proportion of money owed to the total available credit.
- Credit history duration: This history duration score is 15% of the credit score. The longer the credit history, it can be estimated that the credit is of low risk.
- Credit type: The value is 10% of the credit score. This shows how many types of credit the borrower has, for example credit card installments, house installments, and car payments.
- Number of new credits: The last is the number of new credits which is around 10% of the credit score and shows how many new credit accounts the borrower has. If the borrower takes out a lot of credit loans, this can be a high risk for the lender or creditor.
To support the collector’s task, you can provide them with the Debt Collector – Mobile Collection application from AdIns. By installing this application in the smartphone, collectors can easily access the customers’ data.
As the management, you can also freely manage and monitor your collectors. You can manage the collectors by limiting the admission rate of cash money and location validation. All of these features can run on real-time and the data will be immediately stored in the system.
So, are you ready to immerse your collectors’ work methods with technological features in your company?