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There’s no one-size-fits-all solution during collection in lending companies or banks, as the latest McKinsey report confirms. International Sales Evangelist at W.UP, Remco Veenenbuerg, looks at the causes and motivations of customers’ nonpayment are broad.

The causes range across fuzzy boundaries from material hardship to behavioural dysfunction. These insights fit to collectAI’s receivables management solution which is based on customer’s needs.

One-third of those surveyed: “Smaller payments hurt less”

A recent survey of over 400 consumers with credit delinquencies shows that one prominent cause is a lack of capability to manage their money on a monthly basis. One-third of the surveyed prefer a repayment schedule which conducts a weekly or semi-monthly repayment of a small amount. They say, “smaller payments also hurt less.”

Cooperation? A decision making process in four steps

The study also pointed out that four moments can be identified within a customer’s decision process on whether to cooperate with the collector. At each point, there’s a chance to increase the likelihood of repayment.

  1. Opening. When the phone rings, customers must first decide whether to open up this conversation as a sign of willingness to engage.
  2. Commitment. Once some collaboration has been established, the collector needs to move the customer toward a promise to pay.
  3. Negotiation. Two parties will negotiate over the customer’s financial limitations and the amount he or she is willing to pay.
  4. Follow-through. Finally, the customer needs to finalise the payment. At this stage, there are still plenty of opportunities for derailment.

Different from late-stage debt collectors, collectAI applies self-learning algorithms to better understand the customer’s subjective experience of emotions to approach the customer when it’s the right time for her or him, via the suitable channel and with the best tone of voice. This enables the company to provide a digitised hassle-free dunning process.

“Implementation intention” is a psychological concept neglected by receivables managers. Customers with an overdue payment usually have good intentions to pay their debt. A good commitment can be realised by explicitly discussing with customers about when, where, and how payments will be made.

Customers expect highly convenient payment methods

33 percent of respondents in the survey aforementioned said that they are more likely to pay if more convenient payment methods are offered. This is also the approach of collectAI, we offer a broad range of payment options to immediately settle outstanding bills.

CollectAI stands in the customers’ “shoes” which is why it offers a more effective, frictionless payment process. This ultimately improves the conversion and therefore collection rates – also amongst lending companies.

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