arm debt collection

Feb 21, 2024


How Automated Debt Collection Maximizes Debt Recovery and Optimizes Accounts Receivable Management (ARM)

Collection agencies play a critical role by assisting creditors in recovering unpaid debts for a fee. However, these third-party businesses face increasing challenges that complicate the debt collection process.  

Here are few of the challenges collection agencies face - strict government regulations; maintaining positive relationships with debtors; technological obstacles such as continuous update of systems and skillsets to adapt; and reduced cash flow, lower profits, and damaged credit standing.  


If we talk about the charges that collection agencies receive on invoice amount, the usual range is 25 to 50%, And, on average the recovery rate is around 20-30%. Hence the financial gravity of debt recovery is far-reaching. In addition, there are commission fees, legal fees, interest charges, and bad debt write-offs. 

What can resolve all this in one go and permanently? Automated, digital debt collection. 

How Does Digital Debt Collection Work?

Digital debt collection involves using online channels and conversation-based technology to automate payments and customer engagement regarding their unpaid debts. This process relies on moving away from traditional approaches like in-person visits or phone calls. ARM debt collections automation aims to streamline debt recovery for both debtors and creditors. 

Type of Digital Debt Collection 

Description 

Omni-Channel Collections 

Launching GenAI-powered collection bots on digital channels such as Text/SMS, Facebook Messenger, MS Teams, WhatsApp, website, mobile app, Telegram, and more. 

Self-Service Portals 

Offering self-service options (via AI Agents) where debtors can access account information and make payments electronically. 

Automated Phone Calls 

Using powerful GenAI-powered, LLM-driven voice AI or voice AI platform in real-time to reach out to debtors and ask about payments (outbound) or to answer customer queries (inbound). 

AI Agent Assists 

Deploy AI Agent Assists to help human agents or collectors to streamline the collection process and provide smart support to debtors or customers (more suited for complex cases). 

 

What does an AI Automated Debt Collection Process Look Like?

1. Initiation of Conversation

The voice AI initiates the call or to the debtor's phone number. It utilizes automated dialing to reach the person. If it's an omnichannel chatbot, it starts a conversation with the debtor across multiple channels such as messaging platforms, websites, or social media. 

2. Confirmation of Right-Party Contact

The chatbot or voice AI ensures it is interacting with the correct person by verifying their identity, confirming them as the debtor (automating right-party contact - RPC). 

3. Authentication Process

To authenticate the person, the AI Agent will request and verify personal information such as Social Security Number (SSN), Date of Birth (DOB), or zip code. 

4. Engagement with the Debtor

Once authenticated, the AI Agent engages with the debtor in a conversation. It can provide information about the outstanding debt, payment options, and any relevant details. 

5. Payment Offer

It offers the debtor various ways to pay off their debt. This could include one-time payments, setting up recurring payments, or exploring other suitable options. 

6. Personalized Payment Plan Negotiation

If needed, the AI Agent can negotiate a personalized payment plan or automate promise-to-pay (PTP) based on the debtor's financial situation. It adapts responses and provides flexibility within predetermined parameters. 

7. Seamless Transition to Live Agent (if necessary)

In cases of complex queries or situations requiring human expertise, the debtor can seamlessly transfer the conversation to a live agent. The live agent receives a comprehensive overview of the authentication and engagement details to ensure a smooth continuation of the interaction. Platforms like Floatbot.AI display widgets on agent portals with the past transcript of the bot and user so that the agent has a context of the conversation and can seamlessly continue. 

Schedule a Demo

How AI in Debt Collections can Streamline and Automate Debt Recovery?

Deploying AI Agents (Omnichannel Chatbots, Voicebots)

Omnichannel chatbots will help you to reach your customers on all their preferred digital channels – MS Teams, Telegram, WhatsApp, Facebook Messenger, Text (SMS), and more. Ensuring your customers have easy access to payment methods and query resolution will maximize profit-per-account (PPA).  

On the other hand, voicebots possess remarkable human-like qualities and are capable of communicating in multiple languages. For instance, Floatbot.AI supports over 150 languages with low latency. These voicebots automate both inbound and outbound calls, effectively reducing operational costs. By harnessing the power of automation, businesses can streamline their communication processes and enhance overall efficiency.  

Voicebots and Chatbots powered by Generative AI are proficient in understanding the context, intent, and sentiments of each interaction. 

Fallback to Live Collectors

Some queries or cases are complex and so is the process of resolving or addressing them. In such scenarios, it is critical to have a human collector in the loop. When transferred to the live agent or collectors, they have access to past conversations to continue from where the interaction was paused. Platforms like Floatbot.AI, display widget on agent portal with past transcript of bot and user so that agent has context of conversation and can seamlessly continue. 

In addition, live collectors can augment their productivity even more by having a co-pilot to guide them in real-time. Co-pilots or AI Agent Assists are GenAI-powered bots that understand customer sentiments and intents, and offers immediate, tailored responses to your human agents during support or sales interactions.  

They can self–learn from unstructured databases - websites, documents, knowledgebases, etc. They ensure compliance, enable workflows & decision trees, come equipped with RAG-powered cognitive search, summarize calls, and more. All of this results in a 70% reduction in average handling time (AHT) of the collectors. 

100% Compliance with AI and Regulatory Landscape

With Gen AI voicebots and chatbots, you can rest assured that your digital collection agents are operating within the legal boundaries set by these regulations. These technologies are designed to handle sensitive customer information and interactions while maintaining strict compliance with privacy and security standards. Meet the highest standards of compliance and adhere to various regulations such as Reg F, FDCPA, TCPA, HIPAA, PCI-DSS, and more. 

Automate and Boost Right-Party Contact (RPC) and Promise-to-Pay (PTP)

Let the AI Agents take charge by proactively reaching out to the appropriate parties, all while monitoring and managing PTPs effectively – tracking the number of debtors who have committed to making payments by a designated deadline. When AI agents take the lead in reaching out to debtors and monitoring payment agreements, businesses can improve their cash flow and reduce the risk of bad debt. Additionally, this will free up valuable resources. 

Tackle Agent Scarcity & Attrition

Overcome the challenge of limited availability and high turnover of agents. Voice AI revolutionizes the debt collection landscape by automating 70% of inbound and outbound calls. It significantly cuts the high cost of collection by executing calls at less than 1/5th of the manual cost, enabling agencies to operate efficiently. With high scalability, agencies can expand their outreach, handling tier-1 caller queries and covering more debt files simultaneously. AI Agents solve diverse use cases, from outstanding balance checks to call frequency preferences. 

Limitless Scalability & File Segmentation

AI Agents, powered by Generative AI, offer an incredible advantage of limitless scalability, allowing businesses to effortlessly accommodate their ever-growing portfolio and efficiently manage file segmentation. These intelligent agents can seamlessly handle operations. This eliminates the need for manual intervention and empowers businesses to focus on their core objectives while AI takes care of the scalability.  

Businesses now have access to a more efficient and accurate segmentation process. AI Agents are trained on vast amounts of historical data, allowing them to learn and understand the complex patterns and characteristics of different debtors. AI Agents can quickly analyze and categorize debtors based on various factors such as payment history, credit score, income level, and demographic information. Moreover, AI-driven segmentation enables businesses to develop more targeted and personalized debt collection strategies. 

Conclusion

Maximize the efficiency of debt collection using Gen AI-driven Voicebots and Chatbots or AI Agents with Floatbot.AI. Ensure a streamlined, cost-effective debt recovery, and support process in accounts receivable management (ARM). Enable seamless switch from voicebot to chatbot and vice versa. Launch SMS/Text collection bots and WhatsApp collection bots. And MORE. 

We Serve: First party creditors, banks and financial institutions, debt collection agencies, debt collection law firms, BNPL industry, and medical collections. 

With Floatbot.AI: 

  • Experience a 45% surge in collector productivity with automated debt management 
  • Witness a 60% boost in collection rates through strategic automation 
  • Reduce errors related to compliance and data entry by 40% 
  • Improve collection rates through timely and personalized communication by 50%  
Looking for help?
SCHEDULE A DEMO START YOUR FREE TRIAL