The Scientific Research Associated With Effective Bank Debt Collection

As proven through studies conducted by the American Collectors Association, bank debt collection should be thought of as a science. Several key factors in bank debt collection success were uncovered through studies on banking, credit write offs, and human behavioral science. Understanding the results can help banks succeed in debt collection.

Half of customers facing bank debt collection procedures choose not to pay their delinquent debt, despite having the ability to do so. What this means is that persistence is vital, since many customers who can pay eventually will.

Also, contacting these customers as soon as possible is important for multiple reasons. After 60 days of delinquency, the success of bank debt collection drops by 49%, meaning that this is the time when the most money is lost. In addition, consider that most customers with one delinquent account have multiple accounts in collection. Therefore, getting your unpaid account in the front of the line is essential to recovering payment.

The majority of debts collected do not come from collection calls. For collection agencies, the greatest success is found with letters. In fact, 80% of all accounts collected by debt collection firms are collected through letters.

This falls in line with a certain mindset found in the human psyche. Most people will act according to a perceived consequence for their action, or lack thereof. Customers frequently ignore the bank debt collection attempts in favor of paying the cable or phone bill, simply because they receive a piece of paper in the mail asking them to please pay.

Often, letters also avoid being too aggressive. According to bank debt collection processes where demands are high and there is a lack of willingness on the part of the collector to negotiate manageable payments, collection efforts are 15-30% less successful.

Of course, as stated, consequences are a motivator. Third party debt collection firms will report the debtor to the credit bureaus for failure to pay, which is why they are more successful in their recovery efforts than many internal bank debt collection resources.

Understanding the science of bank debt collection helps to increase success in recovery of delinquent funds. The more you know about the way potential debtors think, the better your ability to keep funds coming in.

Also, discover more important facts and resources on commercial debt recovery options, in addition to commercial collection agencies solutions.