Debt collection automation software: development from scratch

What Makes a Good Debt Collection Automation Solution

In a nutshell, a good debt collection automation software performs two main functions:

  1. It automates the decision-making process by using data to enable informed decisions.
  2. It automates workflows and processes so that employees don’t have to deal with repetitive tasks, but can focus on those that require creativity and emotion.

7 Points to Consider When Choosing Between a Custom Debt Collection Software and an Off-The-Shelf Solution

If you’re not sure whether your organization needs a custom debt collection solution or a ready-made one will suffice, check out these points that explain the key differences between the two options.

1. Feature set

Off-the-shelf solutions are made to meet the needs of the average business, i.e. everyone and no one at the same time. That’s why off-the-shelf software is usually stuffed with superfluous features that you’ll never need, but that you have to pay for. Conversely, it may not have the features your business needs.

2. Business processes

Ready-made software provides a limited number of established business processes, e.g., the system sends an email when a debtor doesn’t respond to the call. In most cases, users have to re-set these processes to make them fit the company’s workflow. The point is that such refinement will certainly take a lot of time and effort on your part. In all likelihood, a developer will also need to be brought in.

3. Tailored workflows

Most off-the-shelf solutions have a standard protocol by which debtors are distributed among employees. It may not fit your business for a variety of reasons, making reorganizing accounts receivable time-consuming and reducing effectiveness. On the other hand, when developing a custom solution, you can consider multiple parameters (e.g., an employee’s workload, the number of debtors assigned to him/her, etc.) to distribute debtors in the most efficient way.

4. Analytics tools

Off-the-shelf software rarely offers comprehensive analytics tools. In your custom automated collection system you can implement all the analytics tools you need, whether it’s analysis of employee data, statistics on closed deals displayed as graphs, or whatever else.

5. Communication strategy

Emails sent from ready-made systems often end up in spam folders leading your mailing strategy to fail. To avoid this, choose a third-party mailing service that’s proven its efficiency, and integrate it into your custom solution.

6. Advanced functionality

If you want your automated debt collection software to offer advanced features like website visitors tracking, email open rates, link clicks statistics, etc., you’d better opt for a custom solution, as off-the-shelf ones rarely offer such features. With custom software, all these and many other metrics can be monitored in real time, giving you actionable insights and highlighting weaknesses in your workflow.

7. Usability & suitability

Last but not least, the custom debt collection solution will meet all your & your employees usability requirements. This means that using such a solution is much more convenient and enjoyable than working with an off-the-shelf one and having to keep adjusting it to fit your needs.

How to Develop a Custom Debt Collection Solution

Let’s explore the process of developing custom automated collection systems.

  • Software Requirements Specification (SRS) — a document that describes all functional requirements with use cases, diagrams, mockups of user screens, user journey, etc.
  • Software Architecture Document (SAD) — a document that describes the suggested technology and architecture of the system, third-party integrations, security, performance, reliability, and other non-functional requirements.
  • Project Plan and Work Estimate — a detailed project plan with a breakdown of the total work into 8–16 hours tasks, with priorities, dependencies, and team structure.

Web, Mobile, or Desktop Debt Collection App — Which Is Right For You?

We advise to choose a web app rather than a desktop or mobile app for the following reasons:

Must-Have Features of an Efficient Debt Collection Solution

Let’s explore the must-have features of efficient automated collection systems. Of course, this is not the complete list — the feature set of your custom solution will depend on your company’s individual needs and business goals, and will be tailored to them by your development team.

✔️ Debtor’s life cycle board

A board that allows staff to track the debtor’s life cycle provides a comprehensive overview of debtors and what stage of their debtor journey they’re in. There may be the following stages: Overdue Payment, Reminded, Pending Payment/Partial Payment, Enforcement Action Initiated, Paid Off, etc.

✔️ Personal profiles of the debtors

Each debtor should be assigned a personal profile where all relevant data is available: first and last name, occupation, amount of debt, contact information, communication history including reminders sent, documents shared, etc. The employees assigned to the debtors should also be displayed in the personal profiles.

✔️ Automated distribution of debtors between employees

This feature allows to distribute new debtors in the most efficient way based on the workload, availability, schedule, etc. of the employees.

✔️ Call logs and notes

When collecting debts, you’ve to deal with a large number of calls every day. Automated debt collection calls logs and notes make it easy to keep track of communications with debtors and record the details of conversations.

✔️ Collection scoring and Key Performance Indicators (KPIs)

Collection scoring quantifies the probability of collecting the outstanding balance for accounts in collection. The collection scorecard statistically estimates the debtor’s willingness and ability to pay, helping to determine what actions should be taken to increase collections.

✔️ Access to credit reports

This feature allows you to search debtors’ credit reports for contact information or data about their account activity. Access to credit reports helps to contact debtors and assess whether they’re able to pay the amount owed.

✔️ Debt dispute tracking

This feature provides an overall view of dispute letters submitted and their details, and allows all information about each dispute to be stored in a single location for easy access by staff when needed.

✔️ Payment processing

It’s a key feature that allows to automatically generate invoices based on predefined parameters and send them to debtors. It also enables tracking of payments, notifications of money transfers and other important money-related aspects of the automated collection process. Various third-party providers can be integrated in your software for payment processing.

✔️ Communication tools

By integrating your solution with communication services, you enable employers to reach debtors and send them reminders and notifications (e.g. SMS, emails) without having to switch to another tool.

✔️ Automated reminders and follow-ups sending

Sending reminders and follow-ups is routine and boring work. That’s why it’s better if your system sends reminders and follow-ups automatically, so that employees can focus on other areas that require emotion and creativity.

✔️ Analytics tools

These make it possible to assess all required information (e.g., employee performance, accounts receivable statistics, etc.) in a digestible form of charts and graphs. This is crucial feature for executives as it provides a comprehensive overview of all processes and their efficiency, enable data-driven decision making, and allows for business objectives to be reached in a more efficient manner.

✔️ Employee calendars and schedules

This feature, integrated into your debt collection solution, ensures that your employees can work in an organized and efficient manner by finding everything they need for their work in a single place (calendar, schedule, task lists, etc.). The calendars and schedules are also evaluated when the system distributes debtors among employees.

✔️ Tasking manager

Integrating a task manager into your collection software improves employee efficiency, streamlines workflow, increases transparency of processes across the organization, and eliminates the need for additional software. With this feature, managers can assign their staff and monitor the progress of the task.

Helpful Integrations

By integrating your solution with third-party services, you can significantly reduce development costs by eliminating the need for the team to develop an entire set of features from scratch. Such functionality as payment gateway, communication and accounting tools, and more can be implemented by integrating with third-parties. Below we’ve listed the common integrations for a debt collection solution.

Cost of Debt Collection Automation Software

The final cost of your custom debt collection solution will depend heavily on the rates of the development company you hire to turn your vision into a working product. Multiply their rates by the estimated development time and you’ll get the approximate cost.

  • This team will need approximately one month to deliver the following features: registration & login, create & set up user account, and debtor lists and profiles.
  • Another 3 or 4 months will be required to implement business processes and the debtor lifecycle board.
  • About one to two months will be needed to implement a task manager, employee schedule and automatic reminder feature.
  • Not to mention integration with third-party vendors — adding a payment gateway, auto redial solution and other services will take the team an additional month.

Summary

When it comes to such delicate matters as money and debt, it’s important to strike the right balance between an efficient collection process and smooth debtor experience. In the case of automated debt collection technology can bring several benefits. For example, debt collection software allows streamline workflows, improve efficiency and relationships with debtors, and minimize bad debt write-offs. It also enables the automation of routine tasks, freeing employees up to other activities that require human touch.

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Itexus is a software development company which specializes in the development of Fintech and Healthcare software solutions.

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Itexus Team

Itexus Team

Itexus is a software development company which specializes in the development of Fintech and Healthcare software solutions.