Debt collection is one of the most important aspects of any lending business. While it is essential to have an internal debt collection arm, a large portion of the debt collection process can also be outsourced. In fact, many lenders are utilizing the specialized expertise of debt collection firms rather than handling the process entirely by themselves. 

While debt collection cannot be completely outsourced since there needs to be an internal team that can coordinate between the external firm and internal needs. However, the legwork and the management of debt collection agents can be effectively outsourced to a specialized firm. 

In this guide, we’ll dive into expert debt recovery firms and how they can help your lending business.

Why Choose Expert Debt Collection Services? 

There are several reasons why having an external debt collection team can be a good idea. We’ll take a look at the key ways in which external online debt recovery services can outperform an internal team. 

Specialized Knowledge

The primary benefit of outsourcing your debt collection efforts to a specialized firm is the specialized and focused outlook that the firm will bring to the table. Debt collection firms are primarily focused entirely on money recovery services for a portfolio of lending clients. 

These firms can gather specialized data and stay updated with the latest collection techniques. This kind of specialized knowledge helps them to stay ahead of the curve and provide superior services when compared to an internal team that only works with a single lender. 

Lenders should be clear that they will still need a smaller internal team to manage the business debt recovery and ensure that everything remains on track. 

Advanced Technical Capabilities 

Debt recovery services are specialized and focused on debt collection alone. Since they operate at scale, they can leverage technological capabilities that may be too expensive for a lender to afford on their own. 

For example, there are now several software tools that can help debt collection efforts and improve recovery rates. Also, they can leverage data analysis and automation to help streamline the debt recovery process. 

External debt collection agencies work with several lenders and hence have a huge portfolio of borrowers to connect with. This means that they can use their technological tools at scale which makes it more cost-efficient for everyone involved. 

Improved Recovery Rates 

The primary goal of any debt collection firm is to improve recovery rates for their clients and provide cost benefits. A good debt collection firm will excel at achieving both goals. Debt collection forms can leverage their procedural and substantial capabilities to improve recovery rates while driving down costs by operating at scale. 

This can greatly help lenders since they not only don’t have to manage the entire debt collection process by themselves, but they also save on costs and have a higher likelihood to recover a larger portion of their NPAs. 

Key Features of Outsourced Debt Collection Services

Here are some of the key ways in which debt collection agencies stand out.

Customized Strategies 

Many lenders believe that they may be better off with just an internal team since they can have a greater say in the strategies and methods that are being used to make collections. However, this may be a misnomer. Most debt collection agencies offer customized strategies that not only suit the needs of the lender but also have a high chance of being successful. 

Agencies are willing to experiment with strategies and debt collection techniques to improve their performance and provide the best possible experience to lenders. 

This means that lenders don’t need to worry about agencies following outdated strategies or not being amenable to feedback from them. 

Real-Time Reporting

Another misnomer that lenders may have about debt collection agencies is that they operate too independently. Lenders want oversight over the work that is being done. That’s why many debt collection agencies now offer real-time reporting as part of their service. 

Real-time reporting has been made possible thanks to the latest software tools. Now lenders can be given access to these project management tools so that they can be kept abreast of the latest updates on each of the cases. 

Real-time reporting helps lenders be a part of the collection process and ensure that the right steps are being taken by the debt collection agency.  

Legal Support 

Debt collection solutions are specialized and focused. That’s why these agencies know the nitty-gritties of collection and are quite familiar with the legal landscape regarding collections as well. 

The RBI strictly regulates how lenders can approach debt collections and it is important for any lender to be aware of the various stipulations and follow them according to the letter and the spirit. 

Collection recovery services can help in this regard because they can advise lenders on the legal landscape and can implement these regulations while collecting.  

How Can Legodesk Help?

Legodesk offers an all-in-one software platform that can help supercharge the debt collection and recovery efforts by lenders and debt collectors of all ilk. Our software solution has been built from the ground up keeping the needs of debt collection professionals in mind. 

We offer a range of features such as legal notice automation, case management, contact management, the Feet on Street app, and more. Our software tool not only helps with project management but also helps agents with tasks such as navigation and route optimization. 

We are trusted by banks, NBFCs, as well as enterprises with a lending arm. 

Conclusion 

Finance debt recovery can help lenders with a crucial aspect of their work. While non-performing assets can be unavoidable, steps can be taken to reduce their impact on the business of the lender. Hiring an expert debt recovery solution may be the right choice for lenders who are looking to improve recovery rates while reducing costs.