Get A Head Start on Your Tax Season Collection Strategy
The new year is quickly approaching and with that comes the highly anticipated tax season. This part of the year is said to be the most profitable series of months for debt collectors than any other. Consumers are more likely to settle prior debts after receiving a refund, driving an increase in overall collection rates.
As excitement for a potential surge in revenue continues to build, it is important to have a tactical strategy in place to execute on collections. Follow these steps when planning for the upcoming shift in collections to ensure each opportunity is optimized.
1. Track Previous Trends
While planning for the upcoming tax season, it is critical to estimate how much return on investment is expected. Historical data is the best source of information to analyze in order to predict where the most revenue can be generated.
By forecasting based on the previous years’ collection trends, a clear ROI strategy can be developed. Based on our data, if a strategy is created and executed properly, debt recovery businesses can expect an increase in revenue by 15% to 25% and an ROI of 10 to 15 times the cost spent on letters.
2. Measure Against a Standard
Once previous years’ trends have been established, measure production against a standard indicator. Standard indicators will help align all employees with the business goals and will determine gaps in alignment before it is too late. Identify a standard indicator that is realistic and attainable but will also motivate collectors to step above their typical collection goals.
3. Review and Filter Files
The biggest challenge is to identify which files need to be lettered or called, as well as determining what offers to make. As it is the season for settlements, collectors are more prone to giving these offers to ensure a collection. This is not as beneficial compared to the full collection and should be a last resort when structuring a plan.
Files must be reviewed and filtered based on a defined criteria. This will allow for files to be lettered more easily. To create a plan for higher returns, some of the important account data to track and measure is credit scores, account balance, status, age, and any other account history provided.
4. Ensure Strategy is Ready for Q1
Strategy planning should be performed before the new year so that all components of the business are able to execute. Ideally, implementation of the plan should begin no later than January to give enough time to adjust to any roadblocks that may arise.
Get a head start on your tax season collection strategy with IDAP, a data analytics platform that supports an easy understanding and interaction of your data.