4 Strategies That Make a Big Difference to Your Compliance Profile and Profitability
- March 22, 2023
- Category: Compliance Management
Compliance has become essential to any collection organization in today’s dynamic account receivable landscape. However, many collection businesses view compliance as a cost center rather than an investment. This attitude can be counterproductive, leading to missed growth opportunities. In reality, compliance is not just about ticking boxes; it can help your business to become more competitive.
Recently we sponsored a webinar, hosted by Mike Gibb, CEO, and Editor of AccountsRecovery.net, where Debra Ciskey, Executive Vice President, CACi, Sara Woggerman, President of ARM CBS, and Katie Zugsay, CEO of Finexus Insurance discussed how compliance can be a valuable asset for collection businesses and how your compliance department can develop techniques that are permissible within budget and benefit your business.
For those who missed attending this webinar, we are sharing key takeaways of the same in a two-part series. In the first part of the recap, we captured several strategies for improving compliance in a collection operation, including rethinking the compliance team to ensure that it encompasses critical job functions, creating effective compliance training programs, using automation responsibly, ensuring collaboration between compliance and training departments, and continuously assessing the performance of your compliance investment. In the second part of the recap, we share a few more strategies you can use to improve compliance, reduce costs associated with noncompliance, and improve your bottom line. These include:
Covering all compliance aspects in risk assessments
Regarding risk assessment, the Consumer Financial Protection Bureau’s (CFPB) exam procedure is a good place to begin. The CFPB provides a risk assessment template that can be used as a guide for conducting a comprehensive risk analysis. However, a detailed risk analysis (internal and external) goes beyond just using a template. It involves identifying the laws and regulations that apply to your business, assessing the risks associated with these laws, identifying the risk areas within your organization, and evaluating the controls that are in place or needed to mitigate these risks.
Pro-tip: Policies and procedures form the foundation for assessing compliance risks. Hence, they should be written, re-written, and audited in line with your regular risk assessment exercises.
Keeping vendor risk in check
Effective vendor management is crucial to maintaining compliance and reducing risk in business operations. When onboarding new vendors, ensure they’re aware of all relevant laws and regulations, even if they’re experts in their field. For example, a payment processor may know about electronic fund transfer software but need help understanding the specific compliance requirements for pre-authorized recurring payments. The CCO or head of compliance should identify and resolve any potential risk issues with the new vendor, and ensure they understand the necessity of meeting specific requirements.
Collaboration and brainstorming between departments can also help leverage existing tools and systems to solve prevalent vendor compliance issues. From the agency’s perspective, it’s important to stay on top of compliance aspects such as policies and processes, and to conduct audits regularly and by the book. A Cutting-edge compliance management system (CMS) can be a valuable tool to ensure accurate results in this regard.
Using insurance as a tool to reduce costs of lawsuits
Insurance can be a valuable tool for collection businesses looking to protect themselves from potential lawsuits and ensure compliance with regulations. Interestingly, you can also reduce your insurance premiums by taking proactive steps to minimize risk.
If your business has good controls in place to mitigate the risks that underwriters are concerned about, make sure the broker is aware of these efforts. This information can directly result in credits on insurance premiums – helping you cut down on your miscellaneous expenses. If you are seeking cyber insurance, it’s essential to highlight your cybersecurity measures and regulatory compliance in your applications. Given the high demand for cyber insurance, underwriters may overlook these factors unless you explicitly state them.
Adopting a growth mindset
As your business grows and becomes more complex, your compliance department must also grow to keep pace. For instance, your audit plans should be designed to accommodate business growth and ensure that required information is provided quickly and accurately when auditors request it. Having a dedicated person in the compliance department to handle audits can also prevent costly investigations by regulators.
As you scale, consider switching to a more advanced compliance management system like IPACS. IPACS can help you standardize training methods, automate processes like dispute handling, significantly streamline operational processes by making compliance part of the culture thereby reducing litigations and transform many more compliance processes that have always been labor intensive, which can boost your business’s bottom line by cutting labor costs. Want to learn what all IPACS can do to transform your collection operation? Click here.