Make sure your in-house or outsourced team members have the abilities needed to deal with rising delinquencies.
Sponsored by SWBC
Having a solid, dependable staff is critical to the growth and success of any credit union. Credit union leadership is responsible for hiring employees that:
- exhibit excellent member service skills
- have a keen eye for details
- have strong cross- or up-sell skills
- are honest and dependable, and
- much more
When it comes to hiring a collections staff, the skillset is even more niche. When most people hear the word collector, they automatically picture an annoying, rude person verbally abusing people for being behind on their payments. Obviously, when it comes to how a collection agent communicates with your borrowers, you want someone who will treat your members with respect and be in compliance with regulatory requirements, while still balancing their responsibility to collect payments and reduce delinquencies.
When it comes to hiring solid, stable collection agents, look for (and train for) these characteristics:
1. Listens Well
Habit No. 5 from Stephen Covey’s The 7 Habits of Highly Effective People is “seek first to understand, then to be understood.” This is great advice for everyone, but it can be particularly helpful to collection agents. Collection agents must listen intently to borrowers to truly understand the underlying reasons for their delinquency and craft debtor-specific solutions.
2. Communicates With Ease
In general, discussing finances can be challenging. Money is an uncomfortable topic of discussion for many people, but collection agents have to be able to ask for money and the information necessary to remain in contact with debtors while maintaining a level-head with borrowers who may become emotional or irate.
3. Overcomes Objections
Your collections team should be armed with a number of tactics and best practices to help them overcome objections, but this is also a skillset that some people can innately do better. Salespeople, in general, tend to be quite skilled at overcoming objections, and your collection agents must also know how to use specific and directive rebuttals to overcome debtors’ objections to paying.
4. Creatively Solves Problems
Few things in life are cut and dry, and the most successful collection agents know how to creatively solve problems. Is it possible to offer the borrower a payment plan? Do you have a program that could lower their interest rate and payment? Strong collection agents leverage all of the tools in their tool belts to come up with creative solutions to bringing your borrowers’ delinquent accounts current.
5. Knows How to Close the Deal
ABC: Always Be Closing. While the process of taking a collection call—listening intently, overcoming objections, finding a mutually beneficial solution—is a unique skill, closing the deal is arguably the most important part of the call. A successful collection agent knows that they must repeat the arrangement to the debtor. An even better solution is for the collector to get the debtor to repeat the arrangements. This makes it more tangible to the borrower.
The average price for a new car has risen 2% year-over-year according to Kelly Blue Book, with the average new car loan coming in at $32,000 in Q2 2019. One of the impacts of higher price points is longer loan terms. In fact, the average loan term for a nonprime buyer of a new car reached a record high of 73.21 months, according to Experian’s State of the Automotive Finance Market. With these trends in higher payments and longer terms, your credit union should take steps to prepare for rising delinquencies—whether by ensuring your in-house collections staff is set up for success, or by working with an outsourced collections provider.
Connie Shoemaker is VP/operations for the financial institution group’s AutoPilot® services at CUES Supplier member SWBC, San Antonio, Texas. Have you evaluated your credit union’s collections operation lately? Take our self-assessment, A Guide to Auditing Your In-House Collections.