A debt collection flow chart, or process map, is defined as formally documenting the steps taken by a group of collections staff when performing tasks that drive recovery of debt. Common steps in collections processes include reaching out to debtors, investigating their personal information, collecting payments or creating payment plans, and beginning legal action if necessary. Flow charts in collections lay out the multiple steps completed by each employee in each collections process, reducing the possibility of redundant work and collection errors.
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Benefits of Process Flow Charts for Debt Collections
A properly implemented process work flow doesn’t just improve the efficiency and speed of a collections organization – it ensures a good cash flow. It also protects the collector from errors in debt assessment, ensures that write-offs happen when they should, and reduces redundant work – you don’t want two of your collectors calling the same debtor at the same time. Benefits of flow charts being used to analyze and manage debt collections organizations include:
Money comes in faster – imagine how long it would take you to get to your vacation destination without a map to get you there. The same is true for debt collections processes – the more mapped out the collections journey is, the faster you can reach the end-point of money coming in.
Reduced write-offs of bad debt – analyzing process work flows, and layering on the right metrics allows debt collections managers to understand what steps in the process are effective, and which ones aren’t. Moving cash discounts from the end of the process to the front can reduce write-offs, but you might not uncover this insight if you don’t have the process documented.
Scalability – having clean, concise, and documented processes makes it easier to bolt on additional staff when the time comes to scale up operations.
Compliance Adherence – every debt collections agency has had that rogue collector that goes against all compliance. Get a better grip on them with a standardized work flow that everyone has to follow.
Better Information Gathering Practices – finding the correct contact information for a debtor can be hampered by inefficient contacting processes. Establishing a standardized collections process flow allows for faster, more accurate data collection.
Steps in the Debt Collection Process
Debt recovery is the end goal of a collections agency or department. The first step starts by contacting a debtor and ends either when payment is received or the collections organization allows the debt to lapse. Debt recovery process flow charts typically involve the following steps:
Debtor information gathering: Collection organizations gather information about the debtor to understand them and their debt and then determine the best way to contact. Do they have phone numbers, email addresses, or mailing addresses of the debtor? If they have none of those they might have to contact a debtor’s family member first.
Contact: Initial notices of collections attempt are sent out to debtors to inform them of their status, either through postal mail, telephone, email.
Follow Up: The collectors follow up on initial contact, using various techniques to ensure contact is made. This can include tools designed for identity identification, field agents, or private investigators. Final notices will often be sent at this time.
Debt Lapsed/Legal Action: The organization will choose to either let the debt lapse or pursue legal action. Debts that are below a certain threshold are more likely to lapse, as it allows collection organizations to devote more time to collect larger debts.
Workflows
Workflows
Account MaintenanceThis workflow template illustrates investigation of a collections dispute and the approval or denial of a requested resolution. Purchase and download this template in PDF, Visio and PowerPoi...Type : Workflow TemplateProcess Participants : Collections Investigator, Collections Analyst, Credit Investigator
Bill Collection (Insurance Premiums)This workflow template illustrates the collection of outstanding insurance premiums from individual clients. Purchase and download this template in PDF, Visio and PowerPoint formats, and cus...Type : Workflow TemplateProcess Participants : Collections Investigator, Collections Analyst, Credit Investigator
Workflows
Credit Card CollectionsThis workflow template illustrates the collection of outstanding credit card balances from individual customers (incoming and outgoing call processes). Purchase and download this template in...Type : Workflow TemplateProcess Participants : Collections Officer, Collections Analyst, Collector
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Workflows
Workflows
Workflows
Private Debt RecoveryThis workflow template illustrates the first party (no collection agency involvement) recovery and payment of loans (in default) to private clients. Purchase and download this template in PD...Type : Workflow TemplateProcess Participants : Collections Officer, Collections Analyst, Collector
Workflows
Skip TracingThis workflow template illustrates the research and verification of debtor contact information and whereabouts for collections purposes. Purchase and download this template in PDF, Visio and...Type : Workflow TemplateProcess Participants : Skiptracer, Collections Investigator, Collections Analyst
Workflows
Collections ProcessingThis workflow template illustrates the acceptance, documentation, verification and subsequent follow-up (if necessary) related to customer payment collection. Purchase and download this temp...Type : Workflow TemplateProcess Participants : Collections Investigator, Collections Analyst, Credit Investigator
This rule states that a creditor must not contact the person who owes them money more than seven times within a 7-day period. Also, they must not contact the individual within seven days after engaging in a phone conversation about a particular debt.
A flowchart can also be defined as a diagrammatic representation of an algorithm, a step-by-step approach to solving a task. A simple flowchart representing a process for dealing with a non-functioning lamp. The flowchart shows the steps as boxes of various kinds, and their order by connecting the boxes with arrows.
The credit card issuer makes several attempts to try to collect on the arrears through its in-house collection department. After the last attempt, the bank closes the card and sends Jesse's account to a third-party collection agency to assume collection activity.
They will attempt to contact delinquent borrowers through phone calls and letters and try to persuade them to pay what they owe. They can also conduct searches for a debtor's assets, such as bank and brokerage accounts, to determine their ability to repay.
Debt management is a way to get your debt under control through financial planning and budgeting. The goal of a debt management plan is to use these strategies to help you lower your current debt and move toward eliminating it.
A process flowchart is a diagram that shows the sequential steps of a process and the decisions needed to make the process work. Within the chart/visual representation, every step is indicated by a shape. These shapes are connected by lines and arrows to show the movement and direction of the process.
A Process Flow Diagram (PFD) is a type of flowchart that illustrates the relationships between major components at an industrial plant. It's most often used in chemical engineering and process engineering, though its concepts are sometimes applied to other processes as well.
The collection agency will attempt to contact the debtor through various channels like phone calls, emails, and letters. Their goal is to establish communication, verify the debt information (amount owed, original creditor), and understand the debtor's financial situation.
A good first step is documenting and tracking relevant information. Maintain a separate file for each work. Include the purchase invoice with date and seller.
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