The do’s and don’ts of debt collection with SMS

Text messages are convenient – they allow us to communicate without taking too much of our time, share urgent information if we cannot reach someone over the phone, and remind people of upcoming events or arrangements. Three utilizations which are very common to anyone working in the debt collection business.

Debt collection is a field of work that often requires handling uncomfortable conversations and situations with customers regarding overdue payments. On the one hand, agents need to remain firm and remind customers of their commitments and payment schedules. On the other hand, there needs to be an understanding of the customers’ situation, and consideration of the fact that there is a thin border between reminding a customer of their outstanding payments and harassment.

We read many articles regarding the wrong use of SMS when reminding debt owners of their overdue payments and the negative impact this has on debt collectors’ business. As we already mentioned in a previous blog post, there is one thing debt collectors always agree on: they receive more promises than actual payments. But handled correctly, using SMS in your call operations still has many positive aspects that add value and benefits to debt collection processes.

The do’s

Reaching customers often fails for different reasons: they ignore calls from a number they recognize, they are in a situation when they cannot speak freely, or they are simply being approached at the wrong time. For agents working in debt collection these reasons all translate into one uncomfortable consequence: the extra workload needed to try and reach these customers at a later occasion. If only there were a way to effectively communicate all required information to customers, reminding them of their payments… But there is: SMS!

Studies and experiments have shown that SMS is an efficient communication tool. According to Forbes magazine, SMS messages reach 95% of service users with phones, a hugely impressive percentage. As such, instant messages can help ensure a level of continuous profit for debt collecting companies. It shortens debt collection time, and helps secure a continuous flow of debt repayment by allowing agents to contact a comparatively large number of customers over a short period of time. Email is still an important communication channel, as we already discussed it in a previous blog post. Still, instant messages are cost-effective and are more reliable than emails, as people usually pay them more attention. Furthermore, they provide a perfect solution to easily handle some of the following situations:

Scheduled reminders: many customers have a payment schedule with fixed dates for payments. An automated SMS reminder is the perfect tool to send customers a friendly reminder of their approaching payment dates.

Providing options: SMS messages can also contain options such as payment options, a phone number to request a postponement, a link to make an immediate online payment, or a callback request.

Sure connection: SMS messages can be automated and sent only if an agent is not able to reach a customer by phone. This means that the reminder will certainly reach the customer, either by a call or in a message.

In any case, SMS messages are an effective way of reinforcing information delivered to customers during a phone conversation, or instead of a phone conversation. They also help make it possible to contact customers who ignore phone calls or do not take notice of phone calls from service providers.

The don’ts

As convenient and efficient as instant messages are, however, they hold many traps and can cause debt collection companies many a headache, even bringing legal problems and law suits if not handled correctly. There are ever more articles appearing regarding debt collection which has gone wrong, with debt owners filing complaints about harassment, and it is easy to cross the line and send a friendly reminder too much, especially for companies operating internationally. But if a few simple issues are taken into consideration, and checked and planned carefully when implementing and using an SMS feature in your debt collection processes, you will definitely enjoy the above-mentioned benefits of SMS debt collection, and spare yourself the headaches (and negative PR) so many debt collecting companies are worried about:

Know what to share – in many countries, debt collection companies are not allowed to share the overdue amount needed to be paid in messages. Before sending your customers information you believe to be useful, make sure you are really allowed to share it in an SMS message.

Know when to stop – in many countries, there is a limit to the number of times you are allowed to contact a customer with a payment reminder. Whether it be eight times per week or ten times per month, make sure you know how many times you are allowed to contact a customer, and plan your communication and reminder accordingly.

Know how to communicate – a friendly tone of voice with customers is preferable in such circumstances, but that is not the only key to appropriate communication. Do not forget that giving your customers misleading information or threatening them can not only achieve the opposite effect, but is also punishable by law.

Yes, SMS reminders can sometimes have a dark side to them, and can be perceived as a negative way of handling communication with customers. But this doesn’t necessarily mean that they should be avoided or ignored. Many enterprises and companies dealing with debt collection have already proven that, handled correctly, SMS is an effective channel which makes their businesses lucrative. By obeying three little rules and three little considerations, you can experience one big benefit in debt collection – an increased number of payments from debt owners.

Over-the-phone payments can help too

Of course today’s contact center platforms ensure debt collectors have quite a few tools in their toolbox and SMS is just one of them. One of the coolest options to consider is introducing over-the-phone payments into the process. In this version, debt collectors propose making payments in real-time during conversations with customers which can happen by typing credit card details using the phone’s keypad. This is a fully automated, secure process where credit card details are only passed to the machine processing them. Something to keep in mind!