Decrease Roll Rates with Collections Contact Center Software
In the collections industry, roll rates are harbingers of doom or victory. Collections agencies heed the rates because the numbers indicate business stability or instability. That is, the less the roll rates are, the more stable — and profitable — the agencies will be.
Because of that, organizations rely on the information to reduce the risk of financial ruin. The response somewhat mirrors the consumers they contact; consumers, too, usually want to pay down debt and maintain steady cash flow—and benefiting both parties is possible today. Collections contact center software can help agencies and consumers keep roll rates and finances in check.
What Is a Roll Rate?
People who work in collections or financial institutions possess familiarity with the term “roll rates.” A roll rate refers to a percentage of consumers who increasingly fail to pay down their debt. (In the financial world, these consumers are said to be “delinquent.”)
The consumers “roll” from 30-days late to 60-, 90-, 120-, and 150-days late categories. Consumers eventually reach a “cap” with roll rates; if they roll from the final category, 150-days late to 180 days, they achieve “charge off” status. “Achieve,” however may be the wrong word. A charge-off results in a negative mark on consumers’ credit reports.
Why are Roll Rates Important in the Collections Industry?
Roll rates are important because they forecast a credit card collections agency or financial institution’s risk. (Other organizations sometimes use the rates, too, when assessing their finances or addressing regulatory requirements.) Agencies, institutions, and other entities use the rate to determine whether they reside within a defined, acceptable level of risk. They then use that information to stay within those bounds—or, if possible, well below and outside them.
How Do Collections Agencies Use Roll Rates?
The previous answer provides some illumination: agencies and institutions use roll rates in financial forecasting and modeling. For example, a debt collection agency could use historical roll rates to assess the probability of a debt transitioning from 30-days late to 60-days late.
They can also use data to assess whether certain types of debt are more or less likely to become habitually delinquent. The agency could, for instance, compare which is more likely to be paid in the 30-day bracket; will it be high-dollar or low-dollar debts? They then use that analysis to inform their provisions, cash reserves, and perhaps even service level agreements.
Collections agencies, financial institutions, medical practices, and utility companies use roll rates in another way, too: to inform their communication practices. Consumers in different roll rate categories could receive targeted communications or be placed on a different contact schedule than those whom always pay on time. A simple and relatively common example suffices here; agencies and organizations of all types typically send email and “snail mail” reminders informing consumers about their payment options.
How Can Collections Contact Center Software Decrease Roll Rates?
When debt collection agencies, financial institutions, healthcare facilities, et cetera, want to decrease roll rates, it’s for several common reasons.
• They want to decrease roll rates to manage risk.
• They want to decrease roll rates to increase profits.
• They want to better assess roll rates to improve financial analyses, forecasts, and cash reserves.
• They want to use roll rates to prevent increasing delinquencies and charge-offs.
• They want to use roll rates to enhance communication efforts in order to serve consumers.
Reaching those goals even a decade ago was a time-intensive and sometimes fault-ridden affair. Today, the reality’s changed. Cloud-based technologies, including TCN’s collections contact center software, allow agencies to pull collections analytics. In turn, those enhanced analytics deliver more accurate risk predictions, roll rates, and collection amounts
In addition, cloud contact center solutions can integrate business functions. TCN’s platform, for example, can pull together CRM software, debt collection tools, and other applications. In doing so, agencies and organizations receive more complete consumer profiles and business data that can be used to inform collection processes and practices.
Finally, collections contact center software can be used to improve agency management operations. These functions rely on reporting tools and business intelligence to impact agency performance. Using both business intelligence and a host of integrations, agency managers increase visibility into:
• Collections agency and agent performance
• Maintenance costs
• Roll and recovery rates
Ready to learn more? Download “Implementing TCN to Increase Profit Margins” to witness the benefits of the cloud-based contact center at your collections agency today.