Picking Up Speed With Your Collections Practice - August 12, 2008

By ED CASTAGNA for World Leasing News

The world’s attention in August will focus on China, for the 2008 Olympic Games in Beijing. We will marvel at the world’s greatest athletes, including those who take to the track in a bid to claim the gold medal and the title of the “world’s fastest human.”

What most amazes about these athletes is that they manage to achieve blinding speed with such proficiency and ease of motion. You can’t help but ask, “How do they make it look so easy?”

You may not be able to match their times in the 100 meters, but it would be wise to use them as a guide when it comes to your collections practices. Speed, efficiency, and coordination will earn you the rewards you seek when dealing with bad debt assignments.

In today’s economy, as the number of delinquent accounts is rising, it is vitally important to strike quickly and aggressively, to resolve these issues at every possible stage of the collections process.

Examine your existing collections outsource structure to determine how many unrelated components are being used. Are you using in-house staff, multiple collections agencies, multiple repossession firms, multiple outside attorneys and multiple deficiency balance collection agencies? Estimate the volume of communication that is necessary to manage 100 accounts among all of these unrelated outsource partners during the course of a year.

One attempt to contact each of these partners adds up to hundreds of phone calls, call backs, and emails. Given that one successful contact call never solves a collection problem, think of the actual volume of correspondence it would take to resolve collections issues among all parties for these 100 accounts. Think of how this would lengthen the collections and recovery process.

This multiple-partner structure is too complex, laborious and resource-intensive to meet the needs of most companies in today’s business environment. We have encouraged our customers to adopt a more streamlined, “one-stop shop” approach to collections. Nassau has produced impressive results with our turn-key operational approach, in which we handle all facets of bad debt assignments, including collections, investigations, asset valuations, repossessions, national attorney service, and deficiency collections..

We believe this enables our customers to accomplish more in less time. Imagine starting the process, with demand letters being sent, collection calls made, site visits undertaken in order to collect, and repossessions conducted if necessary and cost effective. Soon after repossession, assets are remarketed, establishing a deficiency balance, which we immediately commence collecting. All relevant data is entered once and then utilized by all internal components within Nassau’s collections structure.

As the client, you have secure, password-protected Web access, enabling you to see status updates, full reports, etc. In essence, this multiplies your headcount to include ours as soon as you deploy our collections service. Online reporting enables you to manage exceptions across the array of services and stages rather than touching every single placement.

Nassau has always believed in a progressive approach to offering the quickest, most successful solutions for recovering value from problem leasing accounts. This constant evolution led us to offer a full range of recovery services. Customers can adopt any combination of services as needed. Our clients value the results of our all-encompassing approach which provides the speed and tenacity required to achieve success in this difficult economic climate.

Today’s higher volume of delinquencies requires speed, along with an aggressive posture to be effective in collecting delinquent accounts before resources are totally depleted. Any delay in acting on opportunities which arise in each stage of the collections process will result in reduced recovery.

It is crucial to consider all possible combinations of solutions to successfully resolve a delinquent account. To effectively utilize all of these combinations takes a resourceful yet unrelenting, all-encompassing collections process. Our approach is sustained, efficient, and successful for our clients, who have made our system part of their ongoing effort.

One of the most important benefits customers receive from the single-outsource model is to speed up the process by gaining an immediate evaluation of the asset and the likely cost of repossession. We will determine the most effective method to collect the money found in the asset, through asset sale or collection of deficiency balance. Again, this can best be accomplished by using one recovery service to save time and money.

A successful one-stop recovery partner would have management and collectors who have the necessary experience to understand the intricate nuances concerning leasing contracts and the correct approaches needed to succeed. You would also want these people to work together seamlessly, and it is unlikely that the multiple partner model can produce that level of efficiency. Keeping track of the process would also be difficult if not impossible.

This is especially important when dealing with accounts with equipment still in place. The outsource partner can often leverage the collection by immediately setting up a repossession/liquidation through its asset group - and then continue collection efforts on the deficiency balance.

Using the one-stop outsource model eliminates the “confusion factor” for a delinquent lessee. By ensuring that lessees work with the same partner throughout the process, this removes one of the most common excuses given (“I didn’t know who to pay”) and speeds up the achievement of a resolution.

It takes skill and years of effort and training to gain gold-medal speed on the track. This also holds true for any company that wishes to operate as a full-service outsource partner. There are state-by-state registration and licensing requirements to be met, along with insurance burdens to bear in order to present yourself as a reputable, professional collections service provider.

It also requires real-world experience based on years of successful implementation. Simply having a business plan won’t cut it; you must be able to prove you’ve done it in the past and have the customer references to back up those claims.

However, by utilizing a one-stop solution to assist them with their delinquent accounts, lessors should see improved collectability with decreased expenditure of time and resources. Thanks to current economic conditions many companies find themselves in a race not of their choosing. If you happen to be a reluctant participant, choose a one-stop partner and “go for the gold.”

Author Bio

Edward Castagna is President of Nassau Asset Management, based in Westbury, NY, a full service firm that provides asset recovery, collections, remarketing and appraisal services to the equipment leasing and finance industry. He has 15 years of experience in all areas of asset management but is best known for his expertise in remarketing strategies and liquidations.