The Collections And Recovery Best Practices Manual

Topics: Risk management, Risk, Risk assessment Pages: 44 (3201 words) Published: June 24, 2015
from
origination to
write-off, the best
practices your
organization needs
to improve
collections and
recovery

The Collections & Recovery
Best Practices
Manual

The New
Normal

Crash, crisis and confusion. Non-performing loans (NPLs)
are on the rise. New regulations constrain capital usage.
And the lingering effects of the credit crunch still
squeeze balance sheets and bottom lines. Europe in
particular is feeling the pain: there are an estimated €1
trillion NPLs on the books of European countries
according to Ernst & Young, and other troubling factors
across the continent, such as:

NPLs and general customer indebtedness rose 17% by the end of 2013 in southeastern Europe alone.

In Romania and Serbia, it rose to 22%; Croatia’s corporate sector saw NPLs rise 27%.

Greece’s financial market NPLs jumped to 31% in 2013.
The Collections & Recovery Best Practices Manual

2

The New
Normal

Other countries are suffering, too:

Analysts believe Turkey’s banks could suffer more in coming years than during the financial crisis, and loans to small and medium enterprises have been four times more likely to default than residential loans in the years following the crisis.

North Africa and areas of the Middle East saw higher percentages of NPLs from 2009 to 2013—with Tunisia and Egypt showing some of the highest volumes.

Payment challenges aren’t limited to retail banks, either:

National regulators are cutting telecom service charges, dropping revenue streams by more than 8%—as the industry moves to
consolidate.
The Collections & Recovery Best Practices Manual

3

The New
Normal

What do all these organizations have in common? They
face increased risk, lower revenue and stricter
regulations thanks to the credit obligations on their
balance sheets. In the case of financial institutions,
Basel III regulations and an ongoing hunt across Europe
by the European Central Bank for bad loans mean dire
consequences due to NPLs. For telecoms and utilities,
revenue is increasingly hard to find from new sources
and markets.

Welcome to the new normal.
There is good news, however. Improved collections and
recovery operations can address these issues, and help
organizations capture more revenue from current and
future credit obligations.

The Collections & Recovery Best Practices Manual

4

Collections
and
Recovery:

But collections and recovery
has also changed.

A

Brave

New
World

Gone are the days of simply deciding to collect and then doing so. Customers now use more channels than ever to borrow, pay and communicate. Those interactions take place across more devices. In addition to multiple channels, customers often have multiple debts or credit obligations with a bank or company, complicating collection and recovery efforts.

In 2013

59%
The Collections & Recovery Best Practices Manual

of multichannel

financial interactions started on

5

Collections
and
Recovery:

A

Brave

New
World

The result?

The collection and recovery tactics of the past just
won’t cut it in this brave new world. Instead, a
comprehensive, technology-centered and multichannel
approach is needed along every stage of the credit
cycle, from origination to write-off.

Data is the key to modernizing collections and
recovery. With the right systems, processes and
practices, collections departments can gain more
insight into customer motivations, risk levels,
revenue opportunities, and their own productivity
and performance.

Best practices across each stage of the credit cycle emphasize this point. The Collections & Recovery Best Practices Manual

6

Collections
and
Recovery:

A

Brave

New
World

Change is never easy,
especially in collections and
recovery
But this manual is designed to help. In it, you’ll find
best practices to improve collections and recovery
at key credit cycle stages. The information provided
will...
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