Collections Workflows & Process Definitions

Understand, Analyze & Improve Collections Department Business Processes

What is a Debt Collections Flow Chart?

A debt collection flow chart, or process map, is defined as formally documenting the steps taken by a group of collections staff when performing tasks that drive recovery of debt. Common steps in collections processes include reaching out to debtors, investigating their personal information, collecting payments or creating payment plans, and beginning legal action if necessary. Flow charts in collections lay out the multiple steps completed by each employee in each collections process, reducing the possibility of redundant work and collection errors.



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Benefits of Process Flow Charts for Debt Collections

A properly implemented process work flow doesn’t just improve the efficiency and speed of a collections organization – it ensures a good cash flow. It also protects the collector from errors in debt assessment, ensures that write-offs happen when they should, and reduces redundant work – you don’t want two of your collectors calling the same debtor at the same time. Benefits of flow charts being used to analyze and manage debt collections organizations include:

  • Money comes in faster – imagine how long it would take you to get to your vacation destination without a map to get you there. The same is true for debt collections processes – the more mapped out the collections journey is, the faster you can reach the end-point of money coming in.

  • Reduced write-offs of bad debt – analyzing process work flows, and layering on the right metrics allows debt collections managers to understand what steps in the process are effective, and which ones aren’t. Moving cash discounts from the end of the process to the front can reduce write-offs, but you might not uncover this insight if you don’t have the process documented.

  • Scalability – having clean, concise, and documented processes makes it easier to bolt on additional staff when the time comes to scale up operations.

  • Compliance Adherence – every debt collections agency has had that rogue collector that goes against all compliance. Get a better grip on them with a standardized work flow that everyone has to follow.

  • Better Information Gathering Practices – finding the correct contact information for a debtor can be hampered by inefficient contacting processes. Establishing a standardized collections process flow allows for faster, more accurate data collection.


Steps in the Debt Collection Process

Debt recovery is the end goal of a collections agency or department. The first step starts by contacting a debtor and ends either when payment is received or the collections organization allows the debt to lapse. Debt recovery process flow charts typically involve the following steps:

  1. Debtor information gathering: Collection organizations gather information about the debtor to understand them and their debt and then determine the best way to contact. Do they have phone numbers, email addresses, or mailing addresses of the debtor? If they have none of those they might have to contact a debtor’s family member first.

  2. Contact: Initial notices of collections attempt are sent out to debtors to inform them of their status, either through postal mail, telephone, email.

  3. Follow Up: The collectors follow up on initial contact, using various techniques to ensure contact is made. This can include tools designed for identity identification, field agents, or private investigators. Final notices will often be sent at this time.

  4. Debt Lapsed/Legal Action: The organization will choose to either let the debt lapse or pursue legal action. Debts that are below a certain threshold are more likely to lapse, as it allows collection organizations to devote more time to collect larger debts.


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