Preparing an RFP for Collection Services: Seven Key Elements

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How to ensure you partner with an ethical and effective collection agency

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This whitepaper is a guide for developing the criteria to select the right agency. The seven key aspects of a reputable, effective collection agency are:

1. Maintains knowledge of current issues and policy changes

2. Embraces modern collection techniques and technology

3. Protects your data with rigid security practices

4. Is transparent with you regarding the work they perform

5. Provides easy file transfer and communication options

6. Maintains industry certifications

7. Is priced appropriately

The following information will help you craft the right questions and provide the right information in your RFP, leading to a successful collection services procurement.

1. Maintains Knowledge of Current Issues

Debt collection is a highly regulated industry performing sensitive work. Regulations and issues surrounding debt collection change frequently. When collection agencies do not keep up with these changes, they can quickly find themselves subject to regulatory action and lawsuits from consumers.

It is critical that you partner with a collection agency that stays ahead of regulatory changes and other issues to ensure consumers are always treated properly and your reputation is protected.

Partnering with an ethical and effective collection agency is vital to providing consumers with a positive experience and resolving unpaid balances. Writing an RFP for collection services that results in hiring the right collection vendor can be complex and challenging.

Do you need an RFP?

The RFP process is time consuming and expensive.

If your procurement rules allow, you may be able to avoid the RFP process through a “piggyback” clause.

Piggyback clauses allow you to join onto a previously-established contract between another organization and a collection agency.

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In your RFP, consider asking about specific issues or regulatory changes, and how that agency is responding to them, such as:

• Increased regulatory oversight from the Consumer Financial Protection Bureau (CFPB)

• Restrictions on calling and texting cell phones due to the Telephone Consumer Protection Act (TCPA)

• New requirements for reporting information to credit reporting agencies like Equifax, TransUnion, and Experian

• For healthcare-related accounts, changes related to 501(r) and changes to Medicare and Medicaid

• Any state and local policy changes that may be affecting you and your consumers

2. Embraces Modern Collection Techniques

Successful debt collection is all about collaborating with consumers to help them resolve their obligations by taking payments and setting up payment plans.

Modern Means of Communication

Over the last 20 years, common means of communication have changed dramatically. Simply calling landline phone numbers and mailing letters, while acceptable in the past, is now ineffective and unhelpful to consumers.

Look for a collection agency that embraces modern means of communication, including providing an mobile-friendly consumer website, live chat, and even a mobile app. By communicating with consumers through the means to which they are accustomed, a modern debt collection agency will recover more revenue and decrease complaints.

Advanced Technology to Ensure Compliance

Any collection agency should record all calls between consumers and the agency and then makes those recordings available to you, the client. By recording

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all calls, the collection agency can accomplish two goals – 1. ensuring compliance with all laws and 2. consumers are treated the way you want them to be treated.

In the event a consumer reports a negative experience over the phone with your collection agency, you will want to be able to listen to those conversations first hand to know what happened. You can then take action to ensure both your consumers are well treated and you are made aware of any false claims.

Call recording also enables collection agencies to monitor all calls for compliance through advanced speech analytics software. This software analyzes the interactions between consumers and collectors, including:

• Evaluates calls based on how well collectors use positive keywords and avoid negative phrases • Can analyze collectors’ and consumers’ emotions during calls• Analyzes calls for specific compliance elements

Reports are then automatically forwarded to supervisors who can provide feedback and training to collectors.

Ask in your RFP if the collection agency records all calls, and to provide details on its call analysis software. Also, ask if the software can record and store the calls in stereo to analyze both the consumer and the agent separately.

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3. Rigid Data Security

90% of all businesses experienced at least one cyber hacking incident in 2016, with 64% of risk managers reporting more than six hacking attempts.1

Debt collection involves sensitive consumer financial data, which can make collection agencies targets for cyber attacks. In order for sensitive data to remain secure, it is vital to partner with a collection agency that uses up-to-date and robust data security measures.

Consider working with your IT department to develop a cyber security questionnaire you can include with your collections RFP. This questionnaire should cover detailed information on specific security requirements, including software update practices, encryption methods, building security, and firewalls.

If a cyber security questionnaire is not feasible, require collection agencies to maintain data security audits and certifications. For example:

• PCI Compliance. PCI (Payment Card Industry) compliance covers the security of credit and debt card information. PCI compliance should be considered a bare minimum for a collection agency.

• SSAE16 Certification. SSAE16 Certification requires an external audit which examines financial information and data security controls within an organization. Collection agencies that maintain this certification will have an improved ability to resist cyber attacks.

• ISO/IEC 27002 Certification. This is an information security standard published by the International Organization for Standardization (ISO) and International Electrotechnical Commission (IEC). ISO/IEC 27002 provides best practice recommendations on information security management systems (ISMS). It allows organizations to develop a control structure that links IT processes with business requirements to improve the availability, confidentiality, and integrity of the overall security management system.

Partnering with a collection agency that maintains as many of these certifications and audits as possible will reduce the chances of sensitive data being compromised.

1 Milewski, D. (2016, May 17). HSB Cyber Study Shows 90 Percent of Businesses Experienced Hacking Incidents in the Last Year. Retrieved November 3, 2017, from https://www.munichre.com/HSB/cyber-survey-2016/index.html

90% of all businesses experienced at least one cyber hacking incident in 2016

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4. Transparency into All Account Activity

Turning over your accounts to a collection agency involves a great deal of trust. The agency will be speaking with your consumers on a daily basis, handling their financial information, and working to recover necessary revenue for you. Collection agencies should support this level of trust by providing a client website with transparent access into their collection activity.

The client website should provide detailed information for each account you send, including when letters were mailed, when calls were made, and what payments have been received and when. The website should also provide comprehensive reporting and statistics so that you can monitor overall recovery rates over time to ensure the agency is meeting expectations.

As mentioned before, in addition to a full-featured client website, the ability to record all calls and share them with you is critical for creating transparency between you and your collection agency.

5. Easy File Transfer and Communication

Working with a collection agency requires frequent communication and data transfer between you and the agency. For example, you may:

• Send new accounts for collection on a regular basis

• Update consumer addresses or other information

• Notify the collection agency when you receive a direct payment on an account

• Receive regular reports on accounts collected to update your records

• Cancel accounts

A collection agency should make all of these actions a simple process through their client website, requiring as little time and frustration from your staff as possible. In your RFP, ask specifically about these capabilities, and ask to see screenshots of the client website.

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6. Industry Certifications and Recognition

Industry certifications and recognition can be a strong signal that a collection agency is ethical, reputable, and effective.

Collection agencies should also have a Professional Practice Management System (PPMS) certification from ACA International. This comprehensive program includes a set of compliance requirements and best practice rules. It closely mirrors the ISO 9000 quality standard, ensuring that the agency will meet both your needs and those of consumers’.

Some collection agencies serve multiple industries. Certifications pertaining to other industries may shed light on the agency’s business practices.

ACA International is the Association of Credit and Collection Professionals. ACA establishes ethical standards and produces a wide variety of products, services and publications for the credit and collection industry.

Information to Include in the RFP

At its core, debt collection is driven by data. Collection agencies will need certain data and information from you to determine if they want to submit a proposal, what information they will include in their proposal, and calculate the appropriate fee structure.

By including the following information in your RFP, you will receive more relevant and more competitive proposals. You will also significantly reduce the number of questions submitted during the RFP process, saving your staff valuable time.

Information to include:

• type of accounts (i.e. patient self-pay, EMS, utilities, fines and fees)• number and dollar amount, by account type, referred to collections annually• current collection rate over time (i.e. 90 days, 1 year, 3 years)• number and dollar amount of any backlog of accounts that will be referred to the winning agency• average balance of accounts referred • average age of accounts referred• what information is provided with accounts (i.e. consumer date of birth, phone number, Social

Security Number, employment information, etc.)• if credit reporting and taking legal action is allowed• if the collection fee is added on to the principal, to be retained by the collection agency, or if the

fee is deducted from the balance collected

Your current collection agency should be able to easily provide most of this data.

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7. Price vs Recovery Rates

Collecting at a high rate while maintaining strict compliance requires significant resources, in both technology and personnel.

Collection agencies with low fees can’t afford to maintain those required resources, and as a result, collect at lower rates and, often, with higher complaint rates.

Because of the reduced collection rate, low cost collection agencies can actually cost clients money when compared to higher cost, full service collection agencies.

When developing the RFP scoring criteria, be careful to balance cost with other important criteria like experience, historical collection rates, data security, etc.

Improving Collections on the Front End

While hiring the right collection agency can improve the recovery of your accounts, you can also improve the collection rate on the front end. For example, you can:

Provide More Consumer Data to your Collection Agency

At its heart, debt collection is driven by data. Consumer phone number, address, place of employment, date of birth, and Social Security Number are all important data elements for improving collections. These data elements improve the agency’s ability to contact the consumer and provide the appropriate options to resolve the balance. The more data elements you provide, the higher the collection rate will be.

Refer Accounts to your Collection Agency Sooner

The sooner accounts are sent to a collection agency after delinquency, the higher the recovery rate will be. Referring accounts quickly reduces the chances that the consumer has moved, changed phone numbers, found new employment, or has forgotten details of the transaction.

Leave Accounts with the Collection Agency Longer

The longer accounts stay with the collection agency, the higher likelihood they will be recovered. Consumers can sometimes fall on hard times financially and are temporarily unable to pay their bills. Over time, however, their situation improves along with their ability to pay. By not canceling your accounts, the overall success in resolving balances will continually increase over time.

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About Professional Credit:

Our clients experience accelerated cash flow as a result of our innovative collection methods. As strategic experts, we offer collection services and A/R outsourcing. With more than 80 years of experience, Professional Credit leads the industry by finding solutions that work for both consumers and clients. We’re accountable to clients and consumers, while being transparent in our operations. That’s how we improve your financial stability.

Professional Credit uses behavioral science, decision science, the most advanced technology, and Lean management principles to deliver the greatest returns to our clients.

www.professionalcredit.comsales@professionalcredit.com888-888-1992

Getting to the Point

• A disorganized RFP will produce disorganized responses. Have all response items clearly identified in one section and clearly identify which forms are to be completed and returned.

• Tired of irrelevant answers in proposals? Ask relevant questions. Focus on what information you need to make the best choice. If the information won’t be helpful, don’t ask for it.

• Carefully consider what information you need and ask directly. Vague questions will produce vague responses. For example, “How many skip-tracing vendors do you use?” instead of “Tell us about your skip-tracing capabilities.”

• State specifically what you want to improve about your current collections process. This prompts agencies to give specific solutions that you can consider during the evaluation process.