Tuesday, 17 June 2014

The importance of solid foundations in a vendor management strategy

With an ever-growing increase in regulatory focus on the debt industry, 2014 is becoming the year where we are all focusing on creating solid foundations for growth, supported by innovative new ways of increasing performance through data, analytics and segmentation. Through analyzing what does and does not work in an Outside Collections Agency (OCA) management strategy, we can drive wide scale benefits, not least to performance.

The foundations of such a strategy fall broadly into three categories:
  • Data transfer – Is information being effectively transferred back and forth from OCAs
  • Process management – Are accounts fully reconciled and not getting stuck in any processes?
  • Portfolio visibility – Do you know exactly what suppliers are doing with each account?
We know that ineffective or broken collections foundations result in poor customer experience, for example: the need to re-supply information to agencies, delays in responding to queries or continued contact attempts to wrong numbers. These are exactly the customer challenges that are driving the current focus on the industry from regulators such as the Consumer Financial Protection Bureau (CFPB).

The good news is that resolving these issues will not only ensure adherence to regulatory guidelines but also drive significant collections uplifts as the customer experience is inextricably linked to performance.

In the 21st century it is important that all industry participants have an effective data transfer mechanism to and, just as importantly, from agencies, as this ensures data accuracy. Accurate data not only prevents incorrect contact attempts, but also supports agencies in the collections process. In addition, a fast turnaround of disputes not only improves the customer experience but also drives uplifts in resultant performance on these accounts by over 40%*.

Finally, having account level visibility of supplier activity not only meets regulatory requirements around supplier monitoring but also helps to fundamentally change the performance management discussions of vendor managers.

There are many more examples which demonstrate the importance of focusing on, and improving, the basic foundations of an OCA management strategy. This importance is becoming ever increasingly critical given the onset of growing regulatory requirements in third party supplier management. But the benefits of getting this right are far wider reaching; reducing wasted resource and driving significant performance uplifts – something which I’m sure all industry participants would welcome.
*source TDX Group data 2014

By Chris Smith, TDX Group

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