The combination of limited inventory and supply chain shortages has shot the price of new and used cars sky-high in recent years. That one factor alone could have a substantial impact on the collections industry, and that’s before you factor in the price of gas!
To help your collection team confront this new challenge head-on, let’s take a closer look “under the hood” to see exactly how this could affect our collection efforts and what we can do to minimize those issues.
How Does This Impact Collections?
The most obvious way that higher vehicle prices will impact the collection industry is that higher prices equate to higher payments, and higher vehicle payments mean that the average consumer will have less money in their monthly budget to catch up on previous obligations.
If we dig down another level, higher vehicle prices might incentivize some consumers to skip driving altogether. That could cause them to miss out on higher-paying jobs to avoid the rising cost of driving and thus leaving them with less money in their pockets.
What Can Collection Agencies Do?
No matter how these scenarios ultimately play out, there is no avoiding the problem of having less overall money available to be collected by reputable agents. With that in mind, let’s focus our efforts on the things we can do to minimize these problems.
Establish and Maintain Quality Relationships
The essential component of any successful collection, regardless of the current economic environment, is the existing relationship between the collection agent and the consumer.
If you make an effort to establish and maintain quality relationships and treat people with respect, there is a much better chance that they will be inclined to work something out with you.
Keep in Touch Without Crossing the Line
It’s no secret that collectors who keep in touch with their accounts have a much better chance of producing results, which is more true today than ever.
Make sure you are making an effort to keep in touch with all your accounts, and be cautious that you are staying inside the rules according to federal and state collection laws.
Don’t Let Payments Start to Slide
It’s always important to watch that your accounts don’t fall behind on their regular payments, and that is even more critical if those consumers are also falling behind on their higher auto payments simultaneously.
Make sure that you are diligent about staying on top of your outstanding accounts, and find the time to contact them the minute they fall behind their usual schedules.
Take Action Immediately
As your accounts begin to fall behind on their regular payments, every day that goes by exponentially decreases the odds of recovering the total amount owed. With that in mind, don’t let yourself have any regrets about not acting soon enough.
As long as you are within federal and state regulations, make every effort to take action and get your accounts resolved while you still can, because other collectors will likely be doing the exact same thing.
The current economic environment is one of the toughest we have seen in years, but that doesn’t mean that collecting old debts is out of the question. Focus on your collection plan and offer up some understanding that new expenses might be making things more difficult for consumers around the country.
