The number of debtor days refers to the amount of time it takes for a creditor to recoup their debt. Reducing the time of the average collection period is a vital component in ensuring your financial solvency. If your average number of debtor days is high, it can have a negative impact on your cash flow and compromise your entire enterprise. So here are some tips from LATERAL on improving your average collection period and reducing debtor days:
1. USE TARGETED AND EFFECTIVE COMMUNICATION
Your first step should be employing an omni-channel digitally enabled collections process. The proliferation of smartphones has transformed the landscape and provides you with an innovative way to recoup your debts. We believe it is essential that lenders leverage all potential channels of digital interaction with their customers, may it be via WhatsApp, SMS, chat, or email. Targeted customer interaction is the key to reaching delinquent borrowers and reducing your average collection period.
2. STAY UP TO DATE WITH CUSTOMER INFORMATION
Debt collection is highly regulated, but when collecting debts creditors still have the right to obtain information on their customers before beginning a credit arrangement. If you’re bidding to reduce your overall debtor days, you should keep customer information up to date. When pursuing delinquent accounts, if you possess up to date information it will invariably save you time. You can improve your average collection period by regularly reformulating and revisiting all your customers’ details and circumstances.
3. USE ARTIFICIAL INTELLIGENCE
Artificial Intelligence (AI) is often referred to as “machine learning”. In other words, machines have developed the power to learn processes that can empower debt collection. AI uses algorithms to store data and then make predictions about debtors, such as when they’re likely to pay or what is the most effective way to communicate with them. LATERAL is an advanced software system that has been engineered using AI. Employing it ensures that a debtor can promptly and effectively evaluate their borrower’s position and, based on analytics, present the most effective options for remediating the delinquency and reducing the average collection period. These analytical techniques can be deployed across all your accounts, improving engagement with customers and dramatically impacting your overall debt collection performance.
In summary, to reduce your debtor days you need to employ a multi-pronged approach. If you can focus on labour intensive processes becoming automated, and if you can employ that latest digital technologies, your average debt collection period will be dramatically reduced.
Learn how LATERAL can help.