Automated Debt Collection System
Features, Integrations, Benefits, Costs
Having 18 years of experience in financial software development, ScienceSoft designs and implements powerful automated debt collection solutions.
Automated Debt Collection Software: The Essence
Automated debt collection software is a solution aimed to streamline debt recovery workflows and achieve 360° view of collection activities and creditor-debtor interactions. Such software simplifies regulatory compliance and can provide analytics-driven optimization of debt collection processes.
With robust automation of debt collection, companies can decrease operational costs, ensure timely cash inflow, and reduce bad debt.
Main user groups
Lending services providers, debt collection agencies, banks, merchants selling on credit.
Accounts receivable software, a CRM or a loan servicing system, a customer portal, etc.
9–12+ months for a custom automated debt collection system.
$150,000–$500,000+, depending on a solution's complexity.
Up to 760%.
Ways to Set Up Automated Debt Collection
General-purpose finance automation software
Implementing a market-available finance automation suite like Microsoft Dynamics 365 Finance or SAP Finance that comprises a digital payment tracking system and an automated debt collection tool.
Pros: Establishing a cohesive financial process automation environment.
Cons: High subscription cost, chances to get unnecessary functionality and miss industry-specific features (e.g., for lending or ecommerce).
Off-the-shelf debt collection software
Implementing OOTB debt collection software, which typically covers payment analytics, automated debt collection planning and execution, dashboards to control debt recovery progress and collector performance.
Pros: A fast and cost-effective way to get debt collection automated.
Cons: Pre-defined features and integrations, inability to upgrade the solution when needed.
Custom debt collection system
Building a custom automated debt collection system that provides all necessary functional and non-functional capabilities to digitalize your unique debt collection flows and meet industry-specific compliance requirements.
Pros: Getting a solution fully tailored to your business needs with no limitation for the number of users.
Cons: Software design requires additional time and investments.
Key Features of a Debt Collection Automation System
Here at ScienceSoft, we create debt collection software with custom-made automation functionality tailored to each client's business specifics. Below, we share a comprehensive list of features that form the core of a powerful automated debt collection solution.
Debt collection planning and optimization
- Automated identification of debts to collect based on the analysis of real-time data about received and due payments.
- Automated debtor segmentation and scoring based on user-defined criteria (delinquency level, debt amount, debtor credit history, etc.).
- Prioritizing debts for collection based on debt aging, debt amount, debtor value and risk, and more.
- Scenario modeling and what-if analysis for various debt collection strategies.
- AI-based suggestions on the optimal debt collection strategies for particular debtors and debtor segments based on the analysis of historical data about creditor-debtor interactions and debtor payment behavior.
- Automated creation of debt collection schedules.
Debt collection task management
- Automated assignment of debt collection tasks to the collectors based on their qualification, availability, schedule, location, etc.
- Automated creation and updating of collection task lists.
- Rule-based routing of debtor calls and omnichannel textual requests to the appropriate collector.
- Setting user-defined KPIs for each collector.
- Configurable dashboards providing debt collectors with an overview of assigned tasks, their priority and deadlines.
Automated debt collection execution
- Template-based creation of textual reminders on due payments for various debtor segments, tailored by different languages, frequency, tone, etc.
- Automatically sending personalized payment reminders, including voice mails, to debtors via email, messaging apps, SMS, a customer portal, and more.
- Automated debt collection calls (phone, VoIP, etc.).
- AI-powered capturing and processing of debtor responses and promises to pay, including those in the textual format and in the form of recorded voice messages.
- Instant routing of debtor responses that the integrated chatbots and IVR bots failed to recognize for processing by human agents.
Debt collection control
- Audit trail of collection-related activities and interactions with debtors.
- Real-time tracking of the received and outstanding debt repayments.
- Monitoring expected vs. actual debt repayments.
- AI-powered verification of debt collection compliance with the internal collection policies.
- Configurable notifications to collectors, e.g., about the assigned tasks, received payments, broken promises to pay, etc.
Debt enforcement automation
- Automated initiation of debt enforcement actions triggered by user-defined events, e.g., receiving a debtor's refusal to pay an overdue amount.
- Automatically generating enforcement notices and sending them to debtors.
- Template-based creation of debt repayment arrangements and multi-currency invoices.
- Rule-based workflows for debt restructuring, purchase, sale, and bad debt write-off in case of a debtor's bankruptcy.
- Automatically generating and sending debt enforcement requests to the legal enforcement authorities.
Dispute management automation
- Automated capture and validation of debt-related claims and supporting documents submitted by debtors.
- Rule-based decision-making on claim approval or denial.
- Automatically sending debtor notifications about approved and denied claims (via email, messaging apps, a customer portal).
- Assigning credit memos to debtors upon valid claims.
Debt collection analytics
- Automated calculation of KPIs such as the total debt amount recovered (by period, debtor segment, collector, etc.), debtor response rate, outstanding payment amount, DSO, and more.
- AI-based suggestions on the appropriate debt collection strategy adjustments based on the analysis of debt repayment progress, collection team performance, and debtor behavior.
- ML-powered forecasting of the expected payment dates and debt recovery rates for particular periods.
- Automated generation of reports on received, delayed, and missed debt repayments.
- Scheduled and ad hoc report submission to the credit bureaus.
Security and compliance
- Compliance with the Fair Debt Collection Practices Act (FDCPA), the Consumer Financial Protection Bureau (CFPB) requirements, the Telephone Consumer Protection Act (TCPA), the Gramm-Leach-Bliley Act (GLBA), SOC1 and SOC2, SOX, GDPR (for the EU), Basel III and CCAR (for banking), other relevant global, country- and industry-specific regulations.
- Configurable debtor data retention and deletion policies.
- AI-based fraud detection.
- Data encryption.
- Multi-factor authentication.
- Role-based access control.
Essential Integrations for an Automated Debt Collection System
ScienceSoft recommends establishing the following key integrations to minimize human involvement across debt collection activities and improve process accuracy and efficiency:
- To trigger automated debt collection procedures and keep the collectors up to date on debt repayment progress.
- To accurately record due payment amounts under debt extension, restructuring, selling, or purchasing agreements and timely write off bad debts.
- For data-driven debt collection planning and automated input of up-to-date debtor information in the collection notifications, repayment agreements, etc.
- To keep sales agents up to date on debtor performance and timely initiate service termination or limit the access to particular products in case of non-payment.
- To streamline debtor communication and speed up the delivery of debt-related documents.
- For automated processing of the information submitted by debtors.
To leverage debt collection data in enterprise-wide analytics.
Email, messaging services, an auto dialing system, etc.
To quickly and easily reach debtors and get their responses via various communication channels.
Credit rating platforms
of the selected credit rating bureaus (e.g., Experian, Equifax)
To easily access up-to-date information about a debtor's financial health (e.g., credit rating dynamics, bankruptcy status checks) and quickly submit credit reports.
Success Factors for Automated Debt Collection Software
In our debt collection automation projects, we always look to cover the following important factors that help drive high payback from the implementation:
To ensure accurate, data-driven debt collection planning and get intelligent recommendations on collection strategy improvements.
To reach debtors via a communication channel of their choice and drive high debtor response rate.
To ensure seamless integration between debt collection software and other business-critical systems and eliminate double data entry.
Intuitive UX/UI and proper user training
To help debt collectors quickly learn how to apply automation to streamline their daily tasks.
Consider implementing an AI-powered debt collection chatbot on top of your customer-facing app. Intelligent digital assistants help eliminate the low-level debtor interaction tasks and provide instant upload of the communication details to debt collection software. This step alone helps achieve up to 70% reduction in debtor coverage costs.
What Is the Cost of a Debt Collection Automation Solution
Based on ScienceSoft's experience, custom debt collection software of average complexity requires $150,000–$300,000 in investments, while building a complex system powered with advanced analytics may cost $500,000+.
Want to know the cost of your debt collection solution?
Benefits of Debt Collection Automation
Debt collection software drives significant operational cost savings and helps prevent revenue leakage. In a long-term perspective, a custom system can bring up to 760% ROI for large companies. An average payback period for such a solution is about 6 months.
Up to 65% reduction
in debt collection costs
Up to 8x faster
debt collection processes
in productivity of the debt recovery teams
in debtor response rate
in bad debt
Off-The-Shelf Debt Collection Automation Software ScienceSoft Recommends
Below, we list the leading offerings in the market of automated debt collection software. ScienceSoft can help you implement the tool that best fits your business specifics, as well as customize the product to your needs and integrate it with your internal systems.
TietoEvry Collection Suite Nova
Debt collection services providers.
- Comprehensive debt collection automation engine.
- Real-time monitoring of debt repayments.
- Full traceability of communications with debtors across multiple channels, including printed correspondence, phone, SMS, email, voice messages, eNova portal.
- Automated reporting on user-defined KPIs.
- Prebuilt APIs to integrate with necessary corporate systems.
It may be hard to customize the software to your specific debt recovery needs.
Banks and lending services providers.
- AI-supported recommendations on optimal collection strategies for each particular debtor.
- Scenario modeling and visualization for various collection strategies.
- Omnichannel debtor interactions, including those via social networks.
- Real-time tracking of debt collectors' performance.
- Rule-based prioritization of collection tasks.
It may be costly and time-consuming to integrate the solution with your existing corporate systems.
Experian's Debt Collection System
SMEs selling on credit.
- Rule-based debtor segmentation by region, debt amount, behavior, and more.
- Intelligent prioritization of debt collection activities.
- Real-time tracking of debt repayment transactions.
- Native integration with Experian's credit database to get real-time updates on a debtor's financial status changes.
- Compliance with FDCPA, CFPB, and other consumer protection regulations.
Experian's system doesn't provide end-to-end automation of debt collection workflows.
Do You Need a Custom Debt Collection Automation System?
Answer a few simple questions and find out whether you should opt for a custom-made solution.
Do you need a solution to automate specific debt collection tasks, e.g., processing debtor responses in user-defined languages or debts triaging for collection based on custom criteria?
Do you need a debt collection system powered with AI, e.g., to predict missed payments or get intelligent guidance on optimal debt collection strategies?
Do you need a debt collection solution providing compliance with the latest debt collection regulations of the countries you operate in?
Do you need to integrate your automated debt collection software with multiple back-office systems or legacy tools?
Do you operate in a regulated industry (e.g., lending, healthcare, public sector) and need a solution providing advanced data security?
Do you need a debt recovery solution with various interfaces for different roles in the collector team?
Do you plan to evolve the solution with new functional and non-functional capabilities in order to adjust it to changing business and legal requirements?
Do you have large teams involved in debt collection processes and look to avoid the software fees associated with the per-user subscription model?
Please tell us a bit more about your needs
Answer at least 3 questions to get results.
You can go with off-the-shelf debt collection software
Looks like market-available solutions are a viable option to meet your debt collection needs. Turn to ScienceSoft if you need help with choosing the optimal ready-made debt collection tools, their implementation, customization, or integration with your existing corporate systems.
You definitely should consider custom development
A tailor-made debt collection solution will help you reap the unique benefits that market-available software cannot offer. Turn to ScienceSoft to get the detailed assessment of a custom debt collection system’s feasibility for your business situation.
Custom debt collection software is your best choice
Looks like market-available debt collection tools don’t fit your specific business requirements and won’t be able to provide the expected operational and economic feasibility. Turn to ScienceSoft to get a consultation on custom debt collection software development and receive cost and ROI estimates
Build Effective Debt Collection Software with ScienceSoft
Entrust the implementation of your debt collection system to professionals. In financial software development since 2005, ScienceSoft provides a full scope of services to help our customers launch reliable automated debt collection solutions with no hassle.
A Featured Success Story by ScienceSoft
Debt Collection Automation for a US-Based Microfinance Company
ScienceSoft developed custom loan management software with automated debt collection capabilities for a reputable financial services company with 50+ offices across the US. The solution provides:
- Automated workflows for company-specific debt collection strategies.
- Configurable dashboards with real-time updates on the received and due debt repayments.
- Scheduled and ad hoc reports on credit repayments (50+ report types).
- Seamless integration with a company's existing software ecosystem and a US-wide SMS service platform.
ScienceSoft is a global IT consulting and software development company headquartered in McKinney, Texas. Since 2005, we provide full-scale digital transformation services to help our customers establish effective automation of their debt collection processes. In our projects, we employ robust quality management and data security management systems backed up by ISO 9001 and ISO 27001 certifications.